SERBIA is close to forming a coalition government seven weeks after a parliamentary vote, local media said yesterday, reporting that three parties – including the nationalist Serbian Progressive party – had struck a deal to govern.

If confirmed, the deal is likely to raise fears about the country's bid to join the European Union.

EU officials are sceptical about the nationalists' desire to join the bloc and are unsure whether they will push through the tough reforms which are a prerequisite of membership.

The nationalist Serbian Progressive Party won the May 6 vote and on May 20 their leader, Tomislav Nikolic, won a presidential run-off. But they have been unable to form a government because the Serbian Socialist Party struck an initial deal to govern alongside the Democratic Party.

However, yesterday, Belgrade's Politika daily newspaper wrote that the Socialists had reneged on that deal and decided to form a coalition with the nationalists and the pro-business United Regions party instead. It said Ivica Dacic, the Socialist leader, would become prime minister in the new government.

Although Mr Nikolic says he is in favour of Serbia joining the EU, he once openly professed to want to build a "Greater Serbia" – a dream that inspired much of the carnage in the former Yugoslavia in the 1990s.

The leadership of the Socialists, a party previously led by the late strongman Slobodan Milosevic, is still to make a final decision on its coalition partner.

"I did not accept anybody's offer. We received the offer, we took the offer into consideration and the party's top bodies will decide," Mr Dacic told reporters in Belgrade.