The ethnic Albanian majority of Kosovo plans to declare independence on Sunday and is expected to win swift recognition from major Western powers despite fierce opposition from Serbia and Russia.
"There would be no greater humiliation for Serbia if it, in any way, signed or agreed in some indirect way to this puppet state", Kostunica told the daily Glas Javnosti in an interview.
His divided coalition will close ranks on Thursday to adopt a document annulling the proclamation in advance.
"We need to focus on making important and historic decisions, to once and for all annul all acts of Albanian separatists and confirm that Kosovo is an integral part of Serbia," he said.
The daily Vecernje Novosti said Serbia's pre-emptive annulment was to ensure "that there is no illusion, not for a split second, that the phantom state can live in Serbia".
The government will also review its secret "action plans" designed to counter the declaration of independence. The plans cover security, diplomatic, legal, economic and social measures.
Kosovo's declaration comes almost nine years after NATO bombs drove out Serb forces to halt a wave of killings by Serb forces in a two year-war against separatist rebels.
The United States and many EU countries are expected to recognize the new state quickly.
RUSSIA OPPOSED
Russian President Vladimir Putin on Thursday accused Europe of double standards in pushing for Kosovo's independence from Serbia but not recognising other states' separatist bids.
"We consider that the one-sided support of a declaration of independence by Kosovo is not moral and not right," Putin said at his annual news conference at the Kremlin. "It's shameful to approach these problems with double standards."
Ninety percent of Kosovo's 2 million people are ethnic Albanians, but around 120,000 Serbs remain.
In a bid to stop the declaration of independence, Serbia, with the backing of Russia has asked for an extraordinary session of the U.N. Security Council on Thursday.
Russia called the meeting at Serbia's request but said Moscow had little hope that the council, which is deadlocked on Kosovo, can resolve the issue.
Serbian Foreign Minister Vuk Jeremic is expected to address the closed-door session of the council, diplomats said.
The document annulling Kosovo's independence, to be endorsed by parliament, will stop short of explicitly banning the government from advancing Serbia's ties with the European Union.
The dispute over pursuing closer ties with the bloc, which aims to take over the supervision of Kosovo in a 4-month transition from the United Nations, has pushed the government to the verge of collapse.
Kostunica insists on putting all other issues aside, until the Kosovo issue has been solved.
Taking a softer stand, Serbian president Boris Tadic, who will be inaugurated on Friday, says that "a European future for Serbia has no alternative, but neither is there an alternative to the defence of territorial integrity".
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