Kosovo must grant Serb-majority municipalities greater autonomy, the US envoy to the Western Balkans said on Wednesday.

US envoy Gabriel Escobar urged Kosovo authorities to withdraw police and mayors from Serb-majority areas and hold fresh municipal elections.

Serbs in northern Kosovo have been demonstrating against the installation of ethnic Albanian mayors after municipal elections that were boycotted by most of the local population.

A little over 90% of Kosovo's population is made up of ethnic Albanians, while four northern municipalities are overwhelmingly inhabited by Serbs.

What did the US envoy say?

"If Kosovo wants to move towards Euro-Atlantic integration it will have to establish (an association of Serb municipalities)," Escobar said.

Kosovo formally applied for membership to the European Union late last year, and also aspires to join the NATO military alliance.

He said that if Pristina did not accept this it would be "turning its back on Europe."

"So it will happen. The question is, will it happen with this (Kosovo) government or a next, a future government," he said, adding that autonomy for the north is stipulated in two previous agreements between Belgrade and Pristina.

He said that Serbia would also have to ensure that Kosovo Serbs turn up to vote in fresh municipal elections.

"Serbia's biggest challenge is to convince Kosovo Serbs to rejoin Kosovo institutions and that they need to participate in local elections in northern Kosovo without preconditions," he said.

The envoy added that Serbian President Aleksandar Vucic had promised that he would encourage Kosovo Serbs to participate in new elections if they are held.

Kosovo president Osmani says new elections possible

Also on Wednesday, Kosovo President Vjosa Osmani told Reuters that new local elections could be held in northern Kosovo if 20% of voters were to sign a petition for them.

Osmani said that she believed this was the most "democratic way" to proceed to new elections and would "ensure the participation of (Kosovo) Serbs."

She said that Pristina needed reassurances that Belgrade would not interfere if it held new elections in Kosovo's north.

Osmani said she wanted NATO-led KFOR peacekeeping troops to remain in Kosovo until Pristina is admitted into the military alliance.

sdi/jcg (Reuters, Beta)