Macedonia is holding Sunday a milestone referendum on whether to grant more right to ethnic Albanians in the country.

The poll is likely to determine whether the 2001 peace agreement to end ethnic violence in will remain in place, observers have said.

Macedonians are voting on keeping or abandoning a divisive districts-redrawing law. It would make the ethnic Albanians a dominant force in 16 of 84 districts.

The reform is a key part of the peace deal under which Albanian rebels agreed to disarm three years ago. Thus, observes have said that the referendum posed a threat over the fragile ethnic peace in Bulgaria's neighbour on the southwest.

But the controversial law itself has fuelled Macedonian fury, and many said could provoke violent protests. During previous discussions of the deal, Macedonians launched mass protests that threatened to bring chaos to the streets of Skopje.