By Boris Groendahl and Alexandra Zawadil

VIENNA, April 13 (Reuters) - Austrian Chancellor Alfred Gusenbauer is working with Serbia on a deal to grant the breakaway province of Kosovo independence in a way that is acceptable to Belgrade.

Gusenbauer told Reuters in an interview the West had to acknowledge that Serb leaders at the moment could not endorse the independence plan proposed by U.N. envoy Martti Ahtisaari and a formula was needed which did not humiliate Belgrade.

"We are working with (Serbian President) Boris Tadic and his people to find a way to implement the essence of the Ahtisaari plan," Gusenbauer said in the interview late on Thursday.

Gusenbauer, a Social Democrat who took office in January as head of a wide coalition government, said Austria had established itself as an honest broker in the region.

"It can't be the goal to humiliate Serbia, but there needs to be a deal where both (Serbia and Kosovo) emerge from the situation holding their heads high," he said.

The U.N. Security Council is discussing Ahtisaari's plan, in which one of the major problems is how to deal with the northern part of Kosovo inhabited predominantly by Serbs.

Gusenbauer said one way out might be to model the area on the semi-autonomous province of Alto Adige in northern Italy, known in Austria as South Tyrol.

The region is populated predominantly by German-speaking people with Austria as their guarantor state.

Italy and Austria agreed in 1972 that the province could have special legislative rights and fill major administrative posts without interference from Rome, an element missing from Ahtisaari's plan for the Serb areas of Kosovo.

"Perhaps the northern part of Kosovo could develop in a similar fashion as South Tyrol has developed in the past in Italy," Gusenbauer said. "There are a number of models."

Serbia has so far rejected any deal that would give Kosovo independence, even if Serbia had a guarantor role for the Serb areas or Serbs given more rights in Kosovo.

Belgrade itself has used Alto Adige as an example too, but in their model, the entire province of Kosovo would remain part of Serbia just as the province is entirely part of Italy.

Gusenbauer said he did not expect Russia to veto the plan in the Security Council but hoped its reluctance to agree quickly meant there was more time to find a solution. He also advised the United States not to rush to recognise Kosovo's independence unilaterally. (Additional reporting by Matt Robinson in Pristina and Ellie Tzortzi in Belgrade)

AlertNet news is provided by