The prime minister of Spain's Basque region, Juan Jose Ibarretxe, has presented new proposals for increased autonomy to the regional parliament.
Ibarretxe denies wanting a complete break with Spain
He said that Basques should be allowed to decide their own foreign policy, and be represented at European Union meetings separately from Spain.
The Spanish Government has reacted angrily to the Basque leader's calls, with Interior Minister Angel Acebes accusing him of trying to rewrite the Spanish constitution.
And spokesman Eduardo Zaplana said Madrid would challenge in the courts any aspects of the plan that it considered unconstitutional.
Dual Basque and Spanish nationality
Basque parliament to be able to call referendums
Supreme court of justice answerable only to Basque parliament
Direct representation in Europe with power of veto
Single Basque electoral district in European elections
2005 referendum on autonomy
Mr Ibarretxe has proposed among other things that Basques have dual citizenship - Basque and Spanish - and direct representation in Europe.
The BBC's Katya Adler in Madrid says that while most Basques say they want a referendum on the future status of their region - which the plan envisages will take place in 2005 - some express concern that the new proposals go a step too far.
But Mr Ibarretxe denied that he wanted to break away from Spain altogether.
He called for the "eradication" of separatist group ETA by addressing local discontent.
Correspondents say the mainstream Basque nationalists are trying to lead ETA towards peace - or squeeze them out of politics - by making themselves more radical.
However, critics say the plan merely panders to the separatists, whose 30-year struggle for independence has cost more than 800 lives.