Kosovo's constitutional court on Tuesday suspended the implementation of a key EU-backed agreement with Serbia, after weeks of opposition protests against the deal.
The move came a day after the U.N. cultural body UNESCO rejected Kosovo as a member, in a vote hailed as a victory by Belgrade.
Kosovo declared independence from Serbia in 2008, a move Belgrade refuses to recognize, and the European Union has been brokering talks to improve relations between the two sides, which fought a war in 1998 and 1999.
A deal reached in 2013 agreed on establishing an association of Serb-run municipalities to improve the rights of minority ethnic Serbs in Kosovo, which is predominantly ethnic Albanian.
But a statement from the court said it was "suspending the implementation of any further legal actions of the Association/Community of Serb-majority municipalities in Kosovo", an "interim measure" pending the court's review.
Kosovo's political opposition is strongly against plans for the association, saying it will deepen Kosovo's ethnic divide and increase Serbia's influence.
Opposition MPs have paralyzed the functioning of parliament in Pristina for weeks, disrupting three sessions by releasing tear gas, in a bid to get agreements with Serbia overturned.
Following failed attempts by parliamentary leaders to reach a compromise on the issue, the president referred the matter to the constitutional court.
Serbia's Foreign Minister Ivica Dacic said the court's decision was a "huge blow to the dialogue in Brussels that is becoming senseless".
The move is an "unprecedented case of evading the agreements reached in Brussels and a huge threat to regional stability", he added.
On Monday, Kosovo came three votes short of the majority needed to join UNESCO. Serbia had lobbied hard against its bid for membership, which would have marked a leap forward in Kosovo's efforts to gain full international recognition.
More than 100 countries recognize Kosovo's independence, but it is not a United Nations member state.
The European Union signed a long-awaited accord with Kosovo last month, a step towards EU membership that will lead to closer ties with the bloc.
Earlier on Tuesday, the European Commission released a report on Kosovo's progress, saying Pristina "remained committed to the implementation" of the 2013 deal with Serbia.
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