Kosovo has been guarded by NATO-led peacekeeping troops since it broke away from Belgrade in a bloody separatist war in 1998-99.

Now, new legislation will transform a small crisis-response outfit, the Kosovo Security Force (KSF), into an defence army with 5,000 troops.

"This vote today begins a new era for our country," parliamentary speaker Kadri Veseli announced as MPs embraced each other after the session, boycotted by minority Serb politicians.

The vote has delighted many Kosovo Albanians, with several hundred gathering in Pristina's main street to celebrate the army as a new pillar of their independence, declared in 2008.

"This is an enormous emotion, we are happy that the creation of our country is being completed," Vlora Rexhepi, a 23-year-old student, told AFP as a group of musicians dressed in traditional costumes played for the crowd.

Kosovo's President Hashim Thaci hailed it as "the best gift for the end of the year season.

"We are finally closing down the state-building process," he wrote on Facebook.

- 'Hard day' for Serbia -

While it will take years for the troops to be fully trained, Serbia has cast the move as a dire threat to regional stability.

NATO and the European Union have also criticised the move as hasty.

But Kosovo felt free to move ahead with strong backing from the US, its most important ally.

Responding in Belgrade, Serbia's Prime Minister Ana Brnabic said it was "a hard day", but that her country would "stay on its path of peace and prosperity".

In particular, Belgrade has been sounding the alarm over the safety of 120,000 Serbs still living in enclaves across Albanian-majority Kosovo, mainly in the north near their contested border.

Those Serb communities are loyal to Belgrade and also broadly against the army plan.

Several hundred students protested Friday in the Serb-half of the city of Mitrovica, which was decorated with Serbian flags in response to the American stars-and-stripes draped across much of the rest of Kosovo in a sign of gratitude for Washington's support.

Goran Rakic, a Serb political leader in the flashpoint city, called Pristina's decision "a gunshot into peace". But he urged local Serbs to "exercise restraint".

NATO, who had warned the move was "ill-timed", said Friday the alliance would now "re-examine" its relationship with the KSF, which it has helped train.

The alliance nevertheless remains committed to securing Kosovo's safety through KFOR, the peacekeeping force is has led since the war with Serbia, said NATO chief Jens Stoltenberg.

The EU echoed the regret, saying "the mandate of the KSF should only be changed through an inclusive and gradual process in accordance with Kosovo Constitution".

Kosovo's government circumvented having to make constitutional changes to create the army, which would have required support from Serb MPs, by voting on a package of laws that kept the name of the KSF but changed its mandate.

- Faltering talks -

The US Embassy was quick to welcome the news but also urged Kosovo and Serbia to take "immediate steps to lower tensions" and make progress in their ongoing dialogue.

The neighbours have struggled to make progress in faltering EU-led talks to normalise ties -- a condition for either to eventually join the bloc.

Their relationship took a serious plunge last month after Kosovo slapped a 100-percent tariff on Serbian goods in retaliation for Belgrade's attempts to undermine its standing on the world stage.

Serbia has blocked Kosovo from various international organisations, including the UN, and also lobbied foreign governments to revoke their recognition of its statehood.

Analysts say the army move is also partly an attempt by Kosovo's government to make up for recent setbacks.

In November, global police organisation Interpol rejected Kosovo's application to become a member.

Another source of public frustration is the lack of visa-free travel status in the European Union, which other Balkan states enjoy.

"After the failure to join Interpol and visa liberalisation, the transformation of the KSF is their only card left," said political analyst Imer Mushkolaj.

"This is why they are trying to push forward this process by any means necessary."

burs-ssm/jj

Facebook