(CNN) -- The United States recognized the Balkan territory of Kosovo as "an independent and sovereign state" Monday, promising the infant republic's president that Washington "will be your partner and your friend."
Kosovo Serbs wave flags in a protest against independence in the Serb-dominated Kosovo town of Mitrovica.
In response, Serbia ordered its ambassador to the United States to return home, the Serbian Embassy said. Serbian President Boris Tadic said Kosovo's move sets a dangerous precedent for other nations with separatist provinces.
Tadic asked the U.N. Security Council to annul the declaration of independence.
"Imagine you were in my place -- the president of a country, which has been deprived of a territory against its will. How would you feel and how would you respond?" he said.
"I'm asking this question of you because if you cast a blind eye to this illegal act, who guarantees to you that parts of your countries will not declare independence in the same way?"
In a letter released by the White House, Bush told Kosovo's President Fatmir Sejdiu that he has agreed to establish diplomatic relations with the new country despite vehement objections from Serbia and its historical ally Russia.
"I congratulate you and Kosovo's citizens for having taken this important step in your democratic and national development," Bush wrote.
Meanwhile, Ivan Vujacic, Serbia's ambassador to the United States, on Monday called the move "a travesty of international law," saying he had unsuccessfully urged State Department officials to reconsider.
"It actually amounted to (U.S. officials) saying, 'This is a fait acompli, the situation will not be changed,'" he said.
European Union nations Monday were also starting to individually recognize Kosovo as the world's newest nation -- but had not agreed collectively on the way forward.
UK Prime Minister Gordon Brown said: "Britain will now formally recognize Kosovo as an independent sovereign state."
France said it would recognize Kosovo, and is in the process of confirming that in writing. Germany indicated its support would come.
But other EU nations including Greece, Spain and Romania have signaled that they would not follow suit amid concerns about the precedent that such a move would set.
Spain -- where militants wanting a separate Basque nation have carried out a 30-year campaign of violence -- said it did not consider Kosovo's independence to be lawful.
Two pro-Russian separatist provinces in Georgia -- South Ossetia and Abkhazia -- were looking to use Kosovo's move to help them declare their own independence.
But the U.S. and EU say that Kosovo's move is not the precursor for a wave of declarations of independence.
Rice said: "We congratulate the people of Kosovo on this historic occasion. President Bush has responded affirmatively to a request from Kosovo to establish diplomatic relations between our two countries.
"The unusual combination of factors found in the Kosovo situation -- including the context of Yugoslavia's breakup, the history of ethnic cleansing and crimes against civilians in Kosovo, and the extended period of U.N. administration -- are not found elsewhere and therefore make Kosovo a special case. Kosovo cannot be seen as a precedent for any other situation in the world today."
Facing severe economic problems and high unemployment, Kosovo is banking on the support of Western powers including the United States and key EU nations. Fireworks, parties but a long road ahead »
But while independence is broadly favored by the West, U.N. Security Council members Russia and China have expressed outright opposition and "grave concern" over Kosovo's unilateral decision.
Serbia insists it will not respond with violence to Kosovo's sovereignty claim, although it refuses to recognize the move.
In the Serb-dominated northern Kosovo town of Mitrovica, scores of Kosovo Serbs took to the streets waving Serbian flags in a demonstration against independence.
In Beijing Monday, Chinese Foreign Ministry spokesman Liu Jianchao expressed grave concern over Kosovo's move for independence. Russia was also standing with its traditional ally, Serbia.
The Security Council is meeting Monday to discuss Kosovo and Serbian president Boris Tadic is expected to emphasize his country's opposition to Kosovo's breakaway. Watch how U.N. is divided over Kosovo's future »
Serbian Prime Minister Vojislav Kostunica said his country will never accept the establishment of a "false country" on its territory.
Fireworks lit the skies and crowds filled the streets of Kosovo's capital Sunday after the territory's parliament declared independence from Serbia.
But Serbs consider the territory the cradle of their civilization, and protesters clashed with police outside the U.S. Embassy in the Serbian capital, Belgrade, as the declaration was issued. Flag burned in Serb region of Kosovo »
Kosovo's Prime Minister Hashim Thaci opened Monday his first cabinet meeting since the parliament declared independence saying: "My full respect goes to you here and especially to our people that they celebrated in such a dignified manner."
The province has been under U.N. administration and patrolled by NATO troops since a 1999 bombing campaign that halted a Serb-led campaign against Kosovo's ethnic Albanian majority.
About 100,000 Serbs still live in Kosovo, making up about 5 percent of the population. Sejdiu pledged to create a nation "where all citizens of all ethnicities feel appreciated."
Nicholas Burns, the undersecretary of state for political affairs, said international recognition offers "a much greater chance for peace and for stability" than the status quo.Burns said the United States plans to provide $334 million in assistance for the new government this year, on top of $77 million in 2007. In addition, about 1,600 U.S. troops will remain with the 17,000-strong KFOR peacekeeping mission that has been deployed there since the end of the 1999 conflict.