A UN special envoy has presented plans for the future of Kosovo which would allow it to separate from Serbia.
Ethnic Albanians overwhelmingly want to break away from Serbia
The plan does not mention the word "independence" - but that is virtually what is on offer, Western diplomats told the BBC.
But Serbian President Boris Tadic has rejected such a proposal, saying Kosovo independence would be "unacceptable".
The UN has administered Kosovo since a Nato bombing campaign forced Serbian troops to withdraw in 1999.
The UN envoy, former Finnish President Martti Ahtisaari, is in Belgrade presenting his proposals to Serbian officials.
Talks to determine Kosovo's final status have been continuing for years without the two sides coming to agreement.
Ethnic Albanians make up 90% of the province's two million people.
KEY PROPOSAL POINTS
Contains no reference to Serbian sovereignty or independence for Kosovo
Blocks Kosovo from joining Albania, or having its Serb areas split off and join Serbia
Gives Kosovo right to use national symbols including flag and anthem
Gives Kosovo right to join international organisations such as UN and IMF
Creates international envoy mandated by UN and EU with power to intervene in government
Retains Nato and EU forces in military and policing roles
Protects non-Albanian minority with guaranteed roles in government, police and civil service
Protects Serbian Orthodox Church sites and Serbian language
According to the United Nations, more than 220,000 non-Albanian Kosovars are living as internally displaced refugees in Serbia and Montenegro.
The ethnic Albanian majority overwhelmingly want to break away from Serbia.
But Serbs regard the province - which is still officially part of Serbia - as the cradle of their culture, and oppose any solution that would lead to its independence.
Mr Ahtisaari's plan, however, amounts to "independence, subject to international supervision", said one Western diplomat, who wished to remain unnamed.
Kosovo would be allowed its own national symbols, including a flag and anthem, and to apply for membership of international organisations like the United Nations.
It would not be unconditional independence, however.
An "international community representative" would be appointed, with powers to intervene if Kosovo tries to go further than the plan allows, while Nato and EU forces would remain in military and policing roles.
Kosovo could not be partitioned between Serbian and ethnic Albanian areas, nor would Kosovo be allowed to join any other state - implicitly ruling out the creation of a "greater Albania".
The interests of Kosovo's Serbs, including the Serbian Orthodox Church and the language, would be explicitly protected, and there would be guaranteed Serb representation in parliament, the police and civil service.
On Friday morning Mr Ahtisaari presented his plan to Serbian President Boris Tadic in Belgrade, though Serbian Prime Minister Vojislav Kostunica, who vehemently opposes independence for Kosovo, did not meet him.
Later on Friday Mr Ahtisaari will travel to Kosovo itself to show the blueprint to ethnic-Albanian leaders.
The UN Security Council will have the final say on whether to adopt the plan.
Serbia has said repeatedly that it would not accept any loss of sovereignty over Kosovo, and Slobodan Samardzic, a Serbian negotiator, rejected Mr Ahtisaari's expected conclusions.
The UN would retain a military presence in Kosovo
"Anything that... violates Serbia's internal laws, cannot be a subject to negotiation," he told state-run Serbian TV.
Kosovo Albanians expressed nervousness ahead of the formal announcement.
Saime Maliqi, 47, who lives in Kosovo's capital Pristina, said: "All of us are waiting desperately for Friday to improve our lives."
Hasan Bytyqi, an ethnic-Albanian merchant, told Associated Press: "To be honest, I am a bit scared of what we are coming to."
Aleksandar Spasic, a 76-year-old Kosovan Serb, said: "I don't believe that Ahtisaari will help Kosovo Serbs a lot. But I will never leave Kosovo... I was born here and this is where I want to die."