The parliament of Montenegro has adopted a constitutional change which will mean a further step towards the dissolution of Yugoslavia.

The legislation - which was passed by 55 votes to seven - will replace the federation with a looser union between Montenegro and Serbia.

It was passed on Monday by the Serbian parliament, but will have to be approved by the federal parliament before it comes into force.

The deal gives the two remaining Yugoslav republics wide-ranging autonomy for a period of at least three years, after which either of them could hold an independence referendum.

The BBC's correspondent in Belgrade, Matthew Price, says people in Yugoslavia view the imminent end of their country with a mixture of nostalgia and inevitability.

"No-one is fully satisfied with the charter - it is a compromise, but it guarantees equality for Montenegro," said Montenegrin Deputy Prime Minister Dragan Djurovic before the vote.

"The most important thing, however, is that both Montenegro and Serbia create a democratic infrastructure that will lead them to EU membership."

International pressure

Serbia and Montenegro will share a common foreign and defence policy.

They will also have a federal president and parliament, but will largely lead independent lives.

They already have separate currencies.

The union also officially includes Kosovo, the largely ethnic Albanian-inhabited province which has been under international administration since 1999, when Nato forces drove out Yugoslav troops.

Serbian and Montenegrin politicians have been under intense international pressure to finalise the deal, which was agreed in outline in March 2002.

A constitutional charter was finally agreed in December 2002.

The European Union's foreign policy chief, Javier Solana, told leaders that relations with the EU would be held back until the deal was sealed.

'Fed up'

The biggest obstacle was how to elect representatives to the federal parliament.

Serbia has a population of about 10 million while Montenegro has about 650,000 inhabitants, including many ethnic Serbs.

Serbia's 250-member assembly voted 166 to 47 to approve the proposal for the new union, also backing separate legislation to implement the deal.

The Yugoslav federation began to disintegrate in the early 1990s as first Slovenia and then Croatia declared their independence.

A series of wars followed that also saw Bosnia and Macedonia secede and the country reduced to a two-member federation consisting of Serbia and Montenegro.