Serbian President Boris Tadic announced his resignation on Wednesday 10 months early, in a manoeuvre aimed at keeping his Democratic Party in power and the country edging closer to the European Union after elections in May.

Tadic's resignation, which he will formally submit on Thursday, sets up a showdown with opposition populists for control of the ex-Yugoslav republic's parliament and presidency on May 6.

Tadic said a fresh mandate through in simultaneous elections was vital if Serbia was to prevent reforms at the heart of its EU membership bid from being derailed.

Analysts say his pro-Western Democratic Party is banking on Tadic's personal popularity to help it close the gap on the opposition Serbian Progressive Party (SNP), whose conservative, populist policy has played to voter anger over the state of the economy and corruption.

SNP leader Tomislav Nikolic, who split from Serbia's ultranationalist bloc in 2008 and embraced EU integration, told the Beta news agency he would run against Tadic in a repeat of the last presidential election when Nikolic narrowly lost.

Tadic, 54, said he would formally submit his resignation to the speaker of parliament on Thursday. The speaker is expected to twin the election with the parliamentary vote set for May 6.

The people will have the opportunity to decide which path Serbia will take, Tadic told reporters.

Rigorous reforms lie ahead of Serbia, and these reforms must be undertaken by strengthened institutions, he said. Therefore the most convenient way is to have elections on all levels. I am doing this out of my sense of political responsibility.

Serbia's outgoing government won a welcome boost in March when the former Yugoslav republic became an official candidate for membership of the European Union, more than a decade after the overthrow of Serb strongman Slobodan Milosevic.

But the government is struggling to maintain economic growth and rein in rising unemployment as the entire western Balkans suffers from the ripple effect of the debt crisis in the euro zone, Serbia's main trading partner and investor.

In an opinion poll issued last week, pollster Faktor Plus said the Democratic Party would take 29.1 percent of the vote, behind the SNP on 33.2 percent. But analysts say the Democrats have much better chances of finding coalition partners.

LEGACY OF WAR, ISOLATION

Djordje Vukovic of the Centre for Free Elections and Democracy (CESID) said the Democratic Party was counting on Tadic's personal strength and charisma.

Another reason is that the next government will have to undertake painful cuts to prevent further economic decline. Austerity measures could hurt Tadic's chances of re-election if he waited until the end of his mandate, Vukovic said.

The country of 7.3 million people is still coming to terms with the political and economic legacy of a decade of war and isolation under Milosevic, who was ousted in 2000 and died in 2006 while on trial in The Hague for his role in the wars that tore apart socialist Yugoslavia.

A bloated public administration, rusting infrastructure and continued tensions with its former Kosovo province has stifled development and deterred investors.

We understand that the motivation for this was to facilitate a well-established government and a solid parliamentary majority after elections, the EU's chief diplomat in Serbia, Vincent Degert, said after Tadic's announcement.

The next government, he said, will face challenges ahead, progress on the European path in particular.

Last year, Serbia arrested and extradited the last two ethnic Serb war crimes suspects still at large, including Bosnian Serb wartime commander and genocide suspect Ratko Mladic.

It then clinched EU candidate status after offering a series of small concessions on Kosovo, Serbia's former southern province which declared independence four years ago.

Belgrade does not recognise the secession, but is under pressure to normalise relations with Pristina if it wants the European Union to open accession talks, potentially by the end of the year. Tensions in Kosovo between the Albanian majority and Serb minority still flare into violence.

Neither Tadic's Democrats nor Nikolic's SNP will likely win enough votes to form a government outright, likely triggering months of horse-trading over cabinet seats and lucrative posts in state-run firms.

Both have ruled out recognising Kosovo as sovereign.

I am sure Serbia will proceed towards the European Union, said Tadic, but we will never recognise Kosovo.

(Writing by Matt Robinson; Editing by Jon Boyle)