(Edits)

By Matt Robinson

PRISTINA, Serbia, Nov 18 (Reuters) - A party led by ex-guerrilla Hashim Thaci has won Kosovo's parliamentary election, according to unofficial results, and is set to lead it into a showdown with Serbia on the ethnic Albanian majority's demand for independence.

With results from 90 percent of polling stations counted, independent election monitors said Thaci's Democratic Party (PDK) had come first with 34 percent, pushing the ruling Democratic League of Kosovo (LDK) into second place.

Thaci, who is now clear favourite to become prime minister of the breakaway Serbian province, said parliament would declare independence "immediately after Dec. 10".

That is the date for a report by Russian, United States and European Union mediators on efforts to find a compromise between Serbia and Kosovo's 90-percent ethnic Albanian majority. So far there is no glimmer of a deal.

All Kosovo's parties back a quick declaration of independence from Serbia for their territory, which has been under U.N. rule and NATO protection since 1999.

The PDK and LDK, bitter rivals since Thaci's guerrilla fighters eclipsed late LDK leader Ibrahim Rugova's policy of passive resistance to Serb rule in the 1990s, are likely to be forced into governing in reluctant coalition.

"(It's) most likely, since there's no other option," a senior PDK official told Reuters.

The LDK saw its support collapse to 22 percent from 45 percent in 2004, according to the Democracy in Action election monitors.

"READY FOR FREEDOM"

"With our victory today begins the new century," Thaci told cheering supporters. "We showed that Kosovo is ready to move forward towards freedom and independence."

Kosovo's guerrillas took up arms in 1998 to end a decade of repression under late Serb leader Slobodan Milosevic, whose response put almost a million civilians to flight and triggered NATO intervention in 1999 and an era of U.N. control.

The Serb minority boycotted Saturday's election to protest against the independence plans.

But many ethnic Albanian voters also stayed at home, seeing little difference in the main parties' ability to go beyond declaring statehood to tackle corruption, poverty stemming from 60 percent unemployment, and a chronic lack of basic facilities.

Only 45 percent of the electorate of 1.5 million turned out, the lowest since the war.

Council of Europe observers called it an "alarmingly low turnout, which sends a strong signal to political leaders". It said the downward trend since 2001 revealed "a profound dissatisfaction among the population".

"People in Kosovo are really fed up with their political situation," said Doris Pack of the European Parliament.

The 120,000-strong Serb minority were under orders from Belgrade not to legitimise a parliament threatening to declare independence.

"The wall between the main communities -- Serb and Albanian -- remains too high and too thick," said Giovanni Di Stasi, head of the Council of Europe observation mission.

Two negotiating sessions between Serbian and Kosovo Albanian leaders on Kosovo's status are scheduled for Brussels and Vienna in the coming week. (Reporting by Matt Robinson, Shaban Buza and Marcin Grajewski; writing by Douglas Hamilton and Matt Robinson; Editing by Kevin Liffey)

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