By David Brunnstrom

BRUSSELS, March 21 (Reuters) - The Balkans could collapse back into chaos if a United Nations proposal to grant independence to Kosovo, a breakaway Serb province, was not accepted, a European Union official said on Wednesday.

Speaking to a European Parliament committee, EU Enlargement Commissioner Olli Rehn said unity among EU states was vital for the U.N. resolution, which calls for Kosovo's independence supervised by the EU.

He also urged Russia not to stand in the way of such a resolution and urged it to approach the issue in a spirit of "responsible multilateralism".

The United Nations has controlled the territory, whose population is predominantly ethnic Albanian, since 1999 when NATO bombing forced Serbia to withdraw troops accused of killing 10,000 Albanians during a counter-insurgency war.

The U.N. proposal represented a "realistic compromise" and needed the full support of EU states, Rehn said.

"If the United Nations Security Council fails to agree on a resolution, it is clear instability and even chaos (can result) in the Balkans," he said. "We must not take our eyes off the Balkans because conflict could still break out in Kosovo."

"It is extremely important that we can achieve European unity because otherwise we are sure to fail," he added.

Officials from all 27 EU states have supported the plan but some have expressed concern it could encourage their own separatist movements. EU officials also say non-EU nations could exploit such concerns to create rifts in the Security Council.

Europe, Rehn said, would be the one to "pay the price" if a U.N. resolution was not passed, saying Kosovo would be "a real litmus test for responsible multilateralism in the United Nations and on the ground".

Rehn said EU member states must provide enough funds for the EU's expanded role in an independent Kosovo. He said he and EU foreign policy chief Javier Solana would present a report on it to EU foreign ministers in Germany next week.

The proposal is expected to pass to the U.N. Security Council next week and would then be discussed at a closed hearing in early April.

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