(Reuters) -The EU's top diplomat Kaja Kallas on Thursday said the bloc has begun to lift sanctions on Kosovo, but that the process would be conditional on a sustained de-escalation of violence and hostilities in the north.

The European Union placed economic curbs on the country in 2023 for its role in tensions in the Serb-dominated north, where leftist Albanian nationalist Prime Minister Albin Kurti has sought to extend government control.

The bloc cut at least 150 million euros ($170 million)in funding, Reuters found.

"As a sign of our commitment, I can announce that the EU has begun to gradually lift measures introduced in June 2023," Kallas told reporters in Pristina.

"The decision opens the door for greater opportunities for crossovers, development and also closer ties with Europe. But it's conditional on sustained de-escalation in the North."

Kallas also urged Kosovo's political parties to end disputes that have blocked the formation of a new government after February elections, saying functioning institutions were needed to secure EU membership.

Kurti has repeatedly failed to secure the election of a new speaker, prompting fears of an economic backlash after months of political stalemate in one of Europe’s poorest countries.

Lawmakers have been meeting every 48 hours since mid-April to elect a new speaker, a step required before Kurti, who failed to win a majority in a February election, can try to form a coalition government.

Kallas, who earlier on Thursday also visited Serbia, said that the 27-member bloc was opened to enlargement and wanted Kosovo to take advantage of the bloc's 6 billion euro Growth Plan for the Western Balkans.

"For that to happen, Kosovo needs functioning institutions that can effectively implement reforms, and that's why I encourage all parties to break the political stalemates and swiftly form a government," she said.

Both Kosovo and Serbia aim to join the European Union, but in order to make progress they need to normalise ties with each other and establish diplomatic relations. In 2013 the parties agreed to an EU sponsored dialogue, but little progress has been made.

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(Reporting by Daria Sito-Sucic; Editing by Conor Humphries)