BELGRADE, Feb 19: A member of a long-awaited new Serbian ruling coalition said on Thursday its members had finalised a cabinet lineup. "Everything is agreed upon," said Velimir Ilic , leader of a monarchist group in a likely minority cabinet led by moderate nationalist Vojislav Kostunica and expected to be backed by the Socialist Party of jailed ex-leader Slobodan Milosevic.

"We accepted last night's offer," Ilic was quoted as saying by the Beta news agency. He gave no details of Wednesday night's talks with prospective government partners, Kostunica's Democratic Party of Serbia and the liberal G17 Plus.

A political source said acting President Dragan Marsicanin may formally ask Kostunica, who helped oust Milosevic in 2000, to form a government at the weekend.

Feuding among the politicians who toppled Milosevic blocked agreement on a majority pro-democracy coalition after December's election produced no clear winner amid widespread discontent about the results of three years of reform.

Western diplomats have voiced concern about the ability of a government relying on Socialist support to push ahead with economic and political change in a country shaped by decades of communism and ruined by a decade of Balkan wars.

They are also worried that it will find it difficult to hand over suspects such as wartime Bosnian Serb military chief Ratko Mladic to the United Nations war crimes tribunal in The Hague, a key condition for badly-needed Western financial aid.

"International support will slow down or be cut off," said Sonja Biserko of the Helsinki Committee for Human Rights. Kostunica has accused the United Nations court of bias against Serbs, blaming its pressure for increased support for the hardline Radical Party, which came first in the election but did not win enough votes to form a government and has no allies.

Milosevic is now standing trial at The Hague tribunal after Kostunica defeated him at the polls in 200. Miodrag Radojevic at the Institute for Political Studies said the next government faced serious problems with a budget deficit that reached 4.5 per cent of Gross Domestic Product last year and in repaying a foreign debt of $13.8 billion.

"The priority must be to raise the standard of living and revive the economy, but without foreign support it is highly unlikely," he said. -Reuters