Montenegro's Orthodox believers were celebrating their Christmas Eve Monday in a tense climate over a bitter dispute between the country's rival churches that has also strained ties with neighbouring Serbia.

Two groups of rival worshippers gathered just a hundred metres apart from each other in the former royal capital of Cetinje for the ritual lighting of a yule log.

One group hails from the Serbian Orthodox Church (SPC), the country's main religious body, while the other follows the smaller independent Montenegrin Orthodox Church, which still lacks global recognition.

There was a large police turnout to prevent incidents as hundreds of believers were gathering peacefully for the ceremonies due later Monday, according to an AFP correspondent.

A controversial religious freedom law passed by parliament late in December has added to the decades-long tension between the two rival clergies.

It also touches on the sensitive issue of Montenegro's national identity and its relationship with Serbia, with which it was tied for nearly 90 years as part of the former Yugoslavia.

The new law requires religious communities to prove ownership of properties from before 1918 -- when Montenegro was absorbed into Serb-dominated Yugoslavia -- in order to keep them.

Members of the Serbian Orthodox Church have staged nightly protests since the controversial law was passed in late December
Members of the Serbian Orthodox Church have staged nightly protests since the controversial law was passed in late December AFP / Savo PRELEVIC

The government says this is to reclaim what is rightfully Montenegrin property. The SPC however has denounced it as a state bid to steal hundreds of its churches and monasteries spread across valuable land.

They accuse President Milo Djukanovic -- a strongman who has been in power for three decades -- of using the law to boost the fortunes of the independent Montenegrin church, which saw a "renewal" in the 1990s.

Since the law was adopted, thousands of people have taken part in evening protest marches in Montenegrin cities calling for the legislation to be revoked.

Some analysts argue the church issue is a kind of proxy war between Djukanovic -- who led Montenegro to independence from Serbia in 2006 -- and the pro-Serb opposition, which still feels an attachment to Belgrade.

Critics accuse Belgrade of using the church to maintain influence in Montenegro's internal affairs.

Last week Montenegro and Serbia each called in the other's ambassador after Serbian hard-core sports fans torched Montenegro's flag while throwing flares in front of its embassy in Belgrade.

Serbian President Aleksandar Vucic dropped a planned a private visit to Serb Orthodox believers in Montenegro on Christmas Eve, which risked further fuelling tensions between the two countries.