BELGRADE -- Serbia and Kosovo have reached an agreement to ease the situation on their border, an EU official confirmed on Thursday.

"We have a deal!," Miroslav Lajčák, EU Special Representative for the Belgrade-Pristina Dialogue and other Western Balkan regional issues, announced on Twitter.

"After two days of intense negotiations, an agreement on de-escalation and the way forward has just been reached," he added, thanking Serbia’s Petar Petković and Kosovo’s Besnik Bislimi who led the technical teams, "for their readiness to negotiate and agree for the good of the people".

Tensions between Kosovo and Serbia ratcheted up earlier this month when Kosovo demanded that Serbian cars crossing the border buy temporary licence plates.

This was in response to Serbia — which does not recognise its former province as a sovereign nation — already requiring vehicles from Kosovo to do the same.

Under the agreement, special police units deployed at the Jarinje and Brnjak border crossings will be removed on October 2 to be replaced by NATO peacekeepers (KFOR). These will remain there for two weeks "to maintain a safe and secure environment and freedom of movement".

From October 4, the sticker regime agreed between the two countries will be applied on a "temporary" basis until a permanent solution is agreed upon. It plans for drivers to cover their licence plates with stickers when entering the other country.

A working group, chaired by the EU, and attended by representatives from the bloc as well as Serbia and Kosovo, will convene on October 21 and will have six months to negotiate a permanent solution.

European Commission President Ursula von der Leyen "warmly" welcomed the agreement on Twitter.

"This is a very positive development," she said. "It's good for the whole region. The dialogue now needs to continue."