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Bosnia's international peace overseer Christian Schmidt on Saturday cancelled controversial rulings by the country's Serb parliament that defy a peace deal that ended the country's civil war.

"The recent decisions taken by the Assembly of Republika Srpska represent a direct violation of the constitutional order of Bosnia-Herzegovina, and also of the Dayton peace agreement," Schmidt told journalists in Sarajevo.

The role of Schmidt as the International High Representative is to ensure compliance with the Dayton peace accord.

On Tuesday, lawmakers in Bosnia's Serb parliament voted to suspend rulings made by the Constitutional Court, further inflaming ethnic tensions in the deeply divided country.

It was the latest in a series of inflammatory political moves engineered by Bosnia's Serb leader Milorad Dodik, who has long campaigned for secession from central institutions.

On June 21, the Serb parliament also adopted a law designed to bypass decisions taken by Schmidt.

Schmidt, a German politician, used his special powers under the Dayton agreement to cancel the Serb entity's two recent decisions, which had provoked strong reactions particularly from Bosnian Muslim leaders.

Some of those leaders viewed them as a direct threat to peace in Bosnia.

The Serb entity's initiatives have also been criticised by Washington, Paris and Berlin. On Saturday, the British and US embassies in Sarajevo both issued statements supporting Schmidt's move.

Challenge to stability: UKÌý

"The United States supports the sovereignty, territorial integrity, and multi-ethnic character of Bosnia and Herzegovina and will continue to hold individuals engaged in anti-Dayton behaviour responsible for their actions" said the US embassy in Sarajevo.

"The action taken by Republika Srpska authorities is a clear and blatant attempt to challenge the framework and stability of this country," said a statement from the UK ambassador to Sarajevo, Julian Reilly.

Dodik -- who remains a Kremlin ally -- has held enormous sway over Bosnia's Serb entity for years and has repeatedly stoked ethnic tensions.

Even before Saturday's ruling was announced, Dodik declared that no decision of the International High Representative would be respected.

"We are not prepared to bow our heads. The RS will not accept any decision by the false High Representative", declared Dodik.

Bosnia has had a dysfunctional administrative system created by the 1995 Dayton peace agreement that succeeded in ending the Balkan conflict.

Under the peace agreement, Bosnia has been divided into two bodies -- a Muslim-Croat federation and a Serb entity, known as Republika Srpska. The two are connected by a weak central government.

Three foreign judges serve on Bosnia's Constitutional Court along with two Croats, two Muslims and two Serbs.