Belgrade  - The Serbian government on Thursday said it has paid 900,000 dollars in compensation to the family of a US student who was beaten by a Serb basketball player in the United States last year.

Serbian state secretary Slobodan Homen confirmed the payment to the family of Bryan Steinhauer. Up until now, the government had labeled the case against Miladin Kovacevic, the alleged assailant, as a "state secret," keeping all information tightly sealed.

The decision to remove the "state secret" tag came a day after a New York prosecutor officially transferred the responsibility for pressing criminal charges to Serbia. All available evidence will now be transferred to Serbia.

The decision ended a row which strained already cold relations between the two countries. The Serbian government welcomed the move, saying the "problem in the Kovacevic case was successfully solved."

Kovacevic was charged last May for the near fatal assault of a fellow student. He fled to Serbia three days after posting bail with the help of Serbian diplomat who issued him travel documents to replace the passport confiscated by police.

Washington insisted on a trial in the United States, but Serbian laws ban extradition. The case drew sympathy in Serbia, whose relations with the United States were already strained following US support for Kosovo's split from Serbia in February 2008.

Serbian president Boris Tadic on Thursday welcomed the development, saying that a "great burden" was lifted and that the case had threatened to become "an obstacle in Serbian-United States relations, which would cause grave political and financial difficulties to Serbia."

In February, Belgrade media disclosed a secret state plan to spend one million dollars to keep Kovacevic in Serbia. Reports said that Serbia would pay 900,000 dollars in compensation to the victim's family and another 100,000 for other expenses.

The reports caused an uproar in Serbia as the news of the payment came as the global financial crisis was hitting the already fragile local economy.

US officials said the money was transferred on March 12. Homen confirmed that on Thursday.

The US embassy in Belgrade welcomed "the willingness of the government of Serbia to pay compensation to the Steinhauer family to help them cope with the consequences of the brutal attack on Bryan Steinhauer," a statement read.

Kovacevic's lawyer said that the transfer of the case will help Kovacevic to have "a fair and just trial in the Serbian court."

The domestic courts have also brought charges against the former consul and vice-consul in New York, Slobodan Nenadovic and Igor Milosevic, who have been accused of aiding and abetting Kovacevic. dpa