If Kosovo is left in limbo, it will be a victory for Milosevic: Jonathan Steele in Pristina The UN protectorate must be given its independence

Here in Kosovo is where it all began. The cancer that has been eating through Tony Blair's second term started out from this small fold in the Balkans.

As images of tractors crowded with refugees rolled across his TV screen, with their message that full-scale ethnic cleansing was under way, the prime minister's moral instincts were aroused.

In power for barely a year, Blair was eager to take action in what was in 1998 an Albanian-majority province of Serbia. After the west's dithering over Bosnia, he saw Kosovo as the chance to make amends.

Blair did not succeed in persuading Bill Clinton to use ground troops, but he can take credit for convincing the US president that diplomacy was failing to stop Slobodan Milosevic and force was needed. The war took longer than predicted but Nato bombed Serb troops off the field and after 78 days (with diplomatic help from Russia) persuaded Milosevic to withdraw, thereby allowing almost 800,000 Albanian refugees to return home.

So the prime minister had a "good" war. His moral certainty and clout with the White House came together to produce relatively rapid success as well as support from most people in Britain, myself included. Kosovo was liberated and Blair is still a hero in Pristina.

Of course, critics pointed out that there was no UN security council resolution authorising Nato's war on Serbia. It was as illegal as the one on Iraq. True enough. But I felt the Kosovo campaign was legitimate - in a way that the Iraq one was not.

The Serbian government was violating human rights on a huge new scale, activating what is known in UN parlance as the outside world's "responsibility to protect". In Iraq there was nothing new about Saddam Hussein's repression and it was less severe in 2003 than earlier. Those who suspected he had no weapons of mass destruction argued that containment was working. For those not yet sure, the UN inspectors were in Iraq and should have been given more time.

But success in Kosovo had gone to Blair's head. The triumphant loss of his war-virginity made him a crusader, throwing away the necessary sense of caution and creating a stubborn self-righteousness. He assumed that, as with Kosovo, he would be justified and acclaimed once the Iraq war was over.

I regret his arrogance, although it does not weaken the case for the Kosovo intervention. One war need not lead to another, since politicians should judge each crisis on its merits. That said, Kosovo is rapidly returning to the international agenda, and we will need clarity and courage to ensure it does not flare up again.

For six years, the territory has been a UN protectorate. It has an elected president, prime minister and parliament, but ultimate power remains with Soren Jessen-Petersen, a courteous Dane who is the latest administrator of the UN mission in Kosovo (Unmik). He took over last year after clashes between Albanians and Serbs left 19 dead and forced more than 4,000 Serbs to flee their homes. The mobs also burned dozens of Unmik vehicles in frustration at the delay in getting a decision on whether Kosovo will be independent.

Western governments had played for time through a policy called "standards before status". Kosovo had to reach hundreds of benchmarks of democratic behaviour before talks on its future could begin. Jessen-Petersen narrowed the policy. "There was a sense after the March riots last year that we had to accelerate the process and simplify standards implementation, not to reward violence but because to keep this place in limbo for much longer would be rather risky," he told me. "We singled out all those standards that are linked to the minorities. The vast majority are focused on protection of the minorities, their living conditions, their rights and so on."

Now decision day is approaching. Kofi Annan will shortly appoint an envoy to review whether standards have been met sufficiently. If, as expected, the verdict is positive, another UN envoy will get the job of negotiating Kosovo's status.

Governments are already drawing up guidelines. They are likely to contain three noes: no return to the prewar position when Kosovo was under Belgrade's rule; no partition; and no change in external borders, ie no unification with Albania.

There is disagreement on Belgrade's role and how to handle Russia's potential for blocking Kosovo's independence. (It was the threat of a Russian veto that prevented Nato seeking UN authorisation before the 1999 war.) Nor is it clear if Annan will give his envoy a deadline. "I don't think anyone wants an open-ended conference that lasts for years, not a 20-year or 30-year Cyprus-type thing," Jessen-Petersen says. "Periods of six to nine months have been mentioned."

Western governments favour some form of independence, but are uncertain how to define it. Germany, once a firm champion of the Kosovo cause, appears to be backtracking. Its diplomats favour something similar to the conservative conclusions of a recent commission on the Balkans chaired by Giuliano Amato, a former Italian prime minister, and made up mainly of other centre-right politicians.

They proposed keeping Kosovo as a UN protectorate with slightly enhanced self-government under independence without full sovereignty. This is a disastrously condescending hybrid that would anger Kosovans and leave property and ownership issues in the legal limbo that now hinders investment. The commission also argued that Belgrade must agree to any change in status.

The International Crisis Group (ICG), by contrast, advocates full independence but with a continuing role for international monitors, foreign judges in the higher courts for ethnically sensitive cases, foreign troops to train a small Kosovan army, and UN staff checking on minority protection. This would be like East Timor, another recently independent state.

Serbia's objections are a problem, but Britain argues that Belgrade must have no veto. Other European governments should take the same view. The ICG says Belgrade may prefer an "imposed" solution rather than sign up to the "loss of Kosovo". Politicians could complain they were victims of outside forces - not an unusual Belgrade line.

Russia is a bigger problem. If Putin cannot be persuaded that Kosovo needs independence, the rest of the world should recognise the new state anyway. Kosovo can go without a UN seat - the only major consequence of a Kremlin veto.

As long as the EU accepts Kosovo's independence, the new state would have most of what it wants. Protecting the Serb minority is a high priority and, after the folly of last year's clashes, most Kosovans realise the door to EU membership will never open if ethnic violence is repeated.

But western governments must not go on delaying. Anything short of independence will mean that Milosevic, in his jail cell in the Hague, will have won after all.