Yugoslav President Vojislav Kostunica has said he will run for the Serbian presidency in next month's election, ending months of speculation.

I have decided after long contemplation to propose to the main board of the DSS that it accepts me as candidate for President of Serbia

Vojislav Kostunica

The decision sets up a contest between two camps of the reformist movement which ousted former Yugoslav President Slobodan Milosevic in 2000.

On one side are Mr Kostunica's moderate nationalists, and on the other are pro-market liberals, whose candidate is Yugoslav Deputy Prime Minister Miroljub Labus.

Labus: Pro-market challenger

The two men have been running level in opinion polls.

Mr Labus declared his candidacy a month ago, but Mr Kostunica kept the nation guessing about whether he would run, until his statement on Friday at the headquarters of the Democratic Party of Serbia (DSS).

"I have decided after long contemplation to propose to the main board of the DSS that it accepts me as candidate for President of Serbia," he said.

"I have no doubt that they will accept."

Power struggle

Mr Kostunica has been involved in an intensifying power struggle with Serbian Prime Minister Zoran Djindjic, a close ally of Mr Labus.

Milutinovic: Safe until January

The two sides have clashed over a range of economic and legal reforms, and over co-operation with the UN war crimes tribunal.

Earlier this year, the two remaining parts of the Yugoslav federation - Serbia and Montenegro - agreed to replace Yugoslavia with a loose "union of states", causing Mr Kostunica's job to disappear.

The new union will also have a federal presidency, but it is unclear how much real power the president would wield.

Problems agreeing the small print of the deal have also left open the possibility of Montenegro opting for full independence.

Other candidates

The current Serbian President Milan Milutinovic, indicted by the UN war crimes tribunal along with Mr Milosevic, will remain in office until the end of the year.

The Serbian Government has refused to extradite him while until then, but the first round of the election to replace him takes place on 29 September.

If no candidate secures an absolute majority, a second round runoff between the two leading candidates will be held two weeks later.

Other prominent candidates are Vojislav Seselj, a right-wing ultranationalist of the Serbian Radical Party; Velimir-Bata Zivojinovic, a popular actor in communist-era Yugoslav films running for Milosevic's Socialist Party; opposition leader Vuk Draskovic, and Borislav Pelevic, a leader of the nationalistic Party of Serbian Unity.