European Union countries on Wednesday decided to start work on an accession treaty for Montenegro, marking a new phase in the small Balkan nation’s path toward joining the bloc.

Ambassadors from the EU's 27 current member states decided to set up an "ad hoc working party" for the drafting an accession pact, a technical but key step in the path towards membership, an official said.

"Congratulations to Montenegro, today we took a big step towards your accession to the European Union," said European Council president Antonio Costa hailing what he described as a "key milestone".

For the first time in over a decade "the EU starts the clock for the next enlargement", he added.

Montenegro is, with Albania, a frontrunner to become the first country to join the European Union since Croatia was admitted to the club in 2013.