But Austrian Vice-Chancellor Susanne Riess-Passer dashed hopes that the accord between Schuessel and Czech Prime Minister Milos Zeman would end a long-running row which threatened the European Union's eastern enlargement plans.

"The agreement is in our view not complete," the Freedom Party leader told a news conference. "It is a step in the right direction but a step which in our view is not enough."

The Temelin issue could seriously destabilise the Austrian coalition or lead to an Austrian veto of Czech membership of the EU. If Austria also presses ahead with a referendum over Temelin, the result may also dictate blocking Czech membership.

The populist Freedom Party, which has the same number of parliamentary seats and cabinet posts as Schuessel's People's Party, has threatened to force a veto of Czech EU membership unless its Temelin demands are met.

Riess-Passer did not explicitly threaten a veto last week and welcomed what she called signs that the Czechs were being more flexible and accommodating.

But she added: "I cannot imagine that operating Temelin is more important to the Czechs than joining the EU."

Asked if her party would continue to oppose Czech EU membership unless Temelin was closed, she replied: "I remain in favour of Czech membership if the Czech government is prepared to recognise that being a member of a community means taking into account the interests of neighbours."

IAEA SAYS TEMELIN SAFE

The Freedom Party would press ahead with plans to force a referendum on the Temelin issue next year, Riess-Passer said.

Austria, which opposes all use of nuclear energy, has long argued that the $2.6 billion Temelin plant, with two Soviet-designed reactors, is unsafe and should be shut.

The deal signed by Schuessel, which he hailed as "an example of good neighbourliness" in Europe, had been preliminary and required the unanimous approval of the coalition, she said.

"Decisions in the government can only be made jointly," the vice-chancellor said.

She dismissed suggestions that by rejecting the agreement, the Freedom Party was putting the future of the centre-right coalition at risk.

The International Atomic Energy Agency (IAEA), the world's nuclear watchdog, said earlier this week a team of experts had found Temelin safe to operate.

Temelin is a key asset of Czech energy firm CEZ , which the government aims to sell early next year.