Thousands of ethnic Albanians celebrated in the streets Sunday after Kosovo's parliament declared independence from Serbia, a bold and historic bid for statehood in defiance of Russia.

They voted on a motion read out Sunday by Prime Minister Hashim Thaci's declaration proclaiming the Republic of Kosovo as "an independent, sovereign and democratic state."

While the vote was unanimous, 109-0, 11 ethnic minority MPs were absent.

"From today onwards, Kosovo is proud, independent and free," Thaci said.

Across the capital of Pristina, people honked horns and fired guns into the air as they waved black and red Albanian flags in celebration of the birth of the world's newest country.

Meanwhile, Serbs who consider Kosovo the heart of their homeland took to the streets on Sunday to show their unwillingness to let the territory slip away.

Riot police clashed with demonstrators who surrounded the U.S. embassy, lighting flares and hurling objects at authorities.

The declaration comes following a 1998-99 war that left 10,000 people dead and that led to years of limbo under UN rule.

During the war, Thaci was leader of the Kosovo Liberation Army, the rebel group battling to end Serb rule. NATO bombing helped drive out Serb forces.

Kosovo is currently a province of Serbia, located at the southern tip, but is up to 90 per cent ethnic Albanian in some areas, most of whom are moderate Muslims. Serbia is mainly Slavic and Orthodox Christian.

Serbia opposes the declaration of independence, calling it illegal, and has vowed Kosovo will never have a seat in the United Nations. The country has however said it will not use force to reclaim the breakaway province.

Serbian Prime Minister Vojislav Kostunica declared Kosovo to be a "false state," adding, "As long as the Serb people exist, Kosovo will be Serbia."

The Serbs have had a presence in Kosovo for at least 1,000 years and consider it the cradle of their culture and religion.

While Thaci promised a "a democratic, multiethnic state," he also had this warning: "Kosovo will never be ruled by Belgrade again."

Russia is an ally of Serbia and also opposes Kosovo's independence.

Russia's President Vladimir Putin has said that recognition of Kosovo without United Nations approval would cause "frozen conflicts" in his country and elsewhere.

Both Serbia and Russia are calling on the UN to annul the declaration, which they say serves to further U.S. military goals.

Within minutes, Russia issued a statement calling for United Nations Security Council consultations on the development.

The Russian Foreign Ministry said the declaration could cause an escalation in ethnic violence.

Some European Union countries such as Spain, Romania and Greece also oppose this development. However, the EU is expected to recognize Kosovo as early as Monday.

UN Secretary-General Ban Ki-moon has remained silent on the issue, leaving it in the hands of the Security Council, which, divided over what to do, called an emergency session on Sunday.

Speaking in Tanzania, U.S. President George Bush said it was in "Serbia's interest to be aligned with Europe and the Serbian people can know that they have a friend in America."

He praised Kosovo for ensuring it would protect the Serb minority's rights.

NATO maintains a force of 16,000 troops in Kosovo. International police have bolstered them in the region's restive north.

NATO forces have said they will continue to provide security and deal firmly with any clashes.

With files from The Associated Press