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Raising the prospects of progress in its bid for EU membership, Serbia ushered in the Orthodox New Year with an acknowledgment that its erstwhile province of Kosovo is all but lost. However, it reiterated its call for a degree of autonomy for ethnic Serbs in northern Kosovo.

Prime Minister Ivica Dacic conceded Serbia's sovereignty over the now independent Albanian-dominated province is all but lost. "Serbian sovereignty over Kosovo is practically non-existent," he told lawmakers, according to Reuters, before insisting that Serbs in Kosovo need institutions of government recognised by all sides, including Kosovo Albanians.

After more than 12 hours of debate, the Serb parliament adopted a resolution calling for broad autonomy for ethnic Serbs within the legal framework of Kosovo, thus offering implicit recognition of the authority of the Kosovo government over its entire territory.

One analyst called the resolution a "milestone", while hardline Serb nationalists predictably accused the government of betrayal at the behest of the EU. Brussels has said membership talks for Serbia depend on improved relations with Kosovo.

While the resolution reiterates that Serbia will never recognise the country of 1.7m people as independent, Dacic warned on January 12 that Belgrade could no longer afford "to keep its head in the sand" over the future of Kosovo.

Catherine Ashton is chairing talks between Dacic and his Kosovo counterpart, former guerrilla commander Hashim Thaci, which resume on January 17 in Brussels.