Kosovo President Ibrahim Rugova died of lung cancer yesterday, leaving a leadership vacuum for ethnic Albanians on the eve of talks to secure the independence from Serbia that he championed.

"President Rugova died at home in Pristina surrounded by his close family, aides and American doctors. He passed away... after fighting this illness with great bravery and extraordinary morality," a statement from the Kosovo presidency said.

A government source in Kosovo said the funeral would take place on Wednesday, the day the United Nations was due to begin direct negotiations between Belgrade and Pristina to decide whether Kosovo's 90 per cent ethnic Albanian majority wins independence or remains part of Serbia as Belgrade insists.

Wednesday's talks in Vienna would be rescheduled for early February, the UN special envoy Martti Ahtisaari said. Rugova, 61, had been under care at his villa since being diagnosed with lung cancer last September at a US military hospital in Germany.

He died without seeing the independence he worked for most of his adult life. But virtually all of the people he led today demand self-determination from Serbia and many flocked to his home yesterday to pay their respects.

In accordance with the rules of Kosovo interim institutions, parliamentary speaker Nexhat Daci was named Acting President. Parliament must choose Rugova's replacement in three months.