Kosovar MPs voted on Friday to expand the existing Kosovo Security Force into a 5,000-troop army, plus 3,000 reservists.
Belgrade called the move a “direct threat to peace and stability” in the Balkans and lashed out at the United States for supporting the proposal.
Kosovo unilaterally declared independence in 2008, but Serbia does not recognise its former province as a state.
Belgrade insists the new army would violate a UN resolution that brought to an end its bloody crackdown on ethnic Albanian separatists in 1999.
Serbian prime minister Ana Brnabic said armed intervention was “one of the options on the table”.
All 107 MPs present in the 120-seat parliament in Pristina voted in favour of passing three draft laws to expand the existing security force, created mainly for crisis response, civil defence and removal of land mines following the 1990s conflict.
Kosovo’s constitution mandates the creation of a national army but no action had been taken for years, while Pristina sought in vain to win the approval of Kosovar Serbs.
Ethnic Serb politicians in Kosovo boycotted Friday’s vote, described as “ill-timed” by Nato’s secretary general.
“I regret that this decision was made despite the concerns expressed by Nato,” said Jens Stoltenberg, warning it could destabilise a region where efforts to ease tensions have been ongoing for decades.
He added: “The North Atlantic Council will now have to re-examine the level of Nato’s engagement with the Kosovo Security Force.”
But the US called the new army “historic” and said it supported “Kosovo’s sovereign right” to maintain forces.
Kosovo’s prime minister Ramush Haradinaj said the new army “will never be used against” Serbia.
He added: “Serbia’s army will now have a partner – Kosovo’s army – in the partnership for peace process.”
But Belgrade fears the army could be used to chase the Serbs out of Kosovo’s north, a claim strongly denied by the government in Pristina.
On Friday, Nikola Selakovic, an adviser to the Serbian president, said his country could send in troops or declare Kosovo an occupied territory. Belgrade’s foreign minister Ivica Dacic said Serbia would seek an urgent session of the UN Security Council about the issue.
President Aleksandar Vucic who visited his country’s troops near the border with Kosovo on Friday, later addressed the nation, denouncing the US for its apparent support of a Kosovar army and praising allies Russia and China for their opposition to the move.
He claimed Kosovo and its “sponsor” – the US – wanted to “quash” the Serbs.
Mr Vucic said Serbia had been “brought to the edge” by Kosovo’s decision and now had no choice but to “defend” itself.
Antonio Guterres, UN secretary general, called on “all parties concerned to exercise restraint and refrain from actions that could raise tensions”.
Any Serbian armed intervention in Kosovo would mean a direct confrontation with thousands of Nato-led peacekeepers, including US soldiers, who have been stationed in Kosovo since 1999.
Balkans analysts, however, said any action by Serbia’s 28,000-strong army against Kosovo was highly unlikely given Belgrade’s aspirations to join the EU.
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