UNITED NATIONS - Hopes dimmed for an agreement from the UN Security Council over the future of Kosovo, with Western diplomats saying negotiations were deadlocked Wednesday and talks would continue in European capitals.

The council's 15 members met behind closed doors to hear from Vojislav Kostunica, the Serbian prime minister, and Fatmir Sejdiu, the president of Kosovo. Kostunica insisted that Kosovo, a province of Serbia that is 90 per cent ethnic Albanian, should remain part of its territory. Sejdiu laid out the Kosovars' demands for quickly gaining independence, a move that would be backed by the United States and key European nations.

Kostunica said the country will not recognize any declaration of independence by Kosovo.

"Will for the first time in the UN's history a decision be taken -- contrary to the will of a democratic state and, what is more, of a UN founding member -- to redraw its internationally recognized borders, to abolish its sovereignty and to amputate 15 per cent of its territory?" he said in prepared remarks.

But the Kosovars say they are ready to become independent.

"We are exhausted after nearly two decades of isolation, war and political limbo," Sejdiu said. "Lack of clarity about our status has held back our economy, discouraged international investment and prevented us from accessing international financial institution lending."

British Ambassador John Sauers said afterward that the meeting "underlined just how enormous the gulf is between the two parties," and he described the current situation in Kovoso as "unsustainable."

While Russians and their close Serbian allies contended any action outside the council would be illegal, Sauers and U.S. Ambassador Zalmay Khalilzad insisted the 1999 UN resolution providing for Kosovo to be administered by the United Nations and NATO troops also contains the legal basis to move ahead with independence.

The U.S. and Europeans insisted the issue of Kosovo's future status is unique, and would not set a precedent for other separatists groups as Russia and Serbia claim.

Khalilzad declared the views of the two sides "irreconciliable," and he said it was time for an independent Kosovo. "The continuation of the status quo poses not only a threat to peace and stability in Kosovo but also to the region and in Europe," he said.

Although Kosovo formally remains part of Serbia, the southern province has been run by the UN and NATO since 1999, when the Western military alliance ended former Yugoslav leader Slobodan Milosevic's crackdown on ethnic Albanian separatists. Sauers recalled that the deportation of ethnic Albanians in the 1990s was the worst since World War II.

Italy's Foreign Minister Massimo D'Alema, whose country holds the Security Council presidency, confirmed the 15 members "did not reach any specific conclusions." But he said the council called on the parties "to maintain peace and refrain from actions that might jeopardize the security situation in the region," as they have both promised.

Wednesday's meeting focused on a recent report by U.S., E.U. and Russian mediators on two years of talks between Belgrade and Kosovo on the province's status. A four-month extension of the talks ended last month without agreement.

However, Russia said those talks yielded some progress and it called for further UN-sponsored negotiations on autonomy for the province. Russian Ambassador Vitaly Churkin insisted there would be more UN talks on Kosovo.

Calling himself an optimist, Churkin said Russia believes "that negotiations can continue and they can produce an outcome which will be acceptable for the two parties and which would keep stability in Kosovo and in the Balkans."

Assuming Russia again blocks action in the Security Council, the Kosovo issue will move to the EU. In that event, Sauers said, the EU will push for internationally supervised statehood for Kosovo under a plan drawn up by a UN envoy earlier this year.

A European diplomat, speaking on condition of anonymity because no decisions have been made, said Wednesday's session would likely bring to an end the council's discussion and predicted the EU would probably take up the Kosovo issue in February after Serb elections.