By Aleksandar Vasovic

BELGRADE (Reuters) - Serbian Socialist leader Ivica Dacic received a mandate on Thursday to form a coalition government with President Tomislav Nikolic's nationalist Progressive party, a move that may raise concerns about Belgrade's bid for European Union membership.

"They have convinced me that they have a parliamentary majority," Nikolic, a former ultra-nationalist who surprisingly beat liberal Boris Tadic in a presidential run-off vote on May 20, told reporters after handing Dacic the mandate.

"The new government's task is to create a better life for our citizens ... and it must stay on a stable European course," Nikolic said.

The new cabinet, which will also include the pro-business URS party, will have to tackle a budget deficit that by far exceeds the 4.25 percent of gross domestic product level agreed with the International Monetary Fund, public debt of over 50 percent of GDP and unemployment around 25 percent.

It will also have to try to unblock a 1 billion-euro ($1.25 billion) stand-by deal with the IMF that was frozen in February over Serbia's inflated spending and widening debt, and also work hard to win the West's trust.

Diplomats say the EU, which made Serbia an official candidate for membership in March, had hoped Tadic would become prime minister in a coalition with the Socialists, marginalizing President Nikolic and keeping the country on a pro-reform path.

But the Socialists, once led by strongman Slobodan Milosevic, rejected proposals to revive a coalition with Tadic's Democratic party after seven weeks of talks and instead sided with Nikolic.

"Our coalition had to answer the question whether it will take the responsibility to lead the government ... as the prime minister, I will never make a decision that will be an injustice to Serbia and its citizens," Dacic said after meeting Nikolic.

Dacic was spokesman in the 1990s for Milosevic who was ousted by a reformist coalition in 2000. On this day in 2001, he was handed over to the Hague war crimes tribunal and died in detention while on trial for fomenting wars in the former Yugoslavia.

Under Dacic, the Socialists have shed most of Milosevic's legacy since 2000 but diplomats perceive them as opportunists rather than reformers.

"I took the responsibility ... and there will be no return to the 1990s," Dacic said.

Dacic has said previously Serbia should turn to more spending to spur growth instead of resorting to stringent austerity measures recommended by the IMF.

He has also said in the past that Serbia's former Kosovo province, which declared independence in 2008, should be partitioned between Serbia and Kosovo's ethnic Albanians.

The EU has asked Nikolic to mend ties with Kosovo before it can hope for progress in its EU bid.

Nikolic has repeatedly said he is in favor of Serbia joining the EU and wants to speed up the process.

However, few in the region have forgotten he once professed a wish to build a "Greater Serbia" - a dream that inspired much of the carnage in the former Yugoslavia in the 1990s in which 125,000 people died. ($1 = 0.8028 euros)

(Reporting by Aleksandar Vasovic, writing by Zoran Radosavljevic; Editing by Robin Pomeroy)