An early election had to be called after the LDK pulled out of Mr Thaci's government in October in a row over its then leader, Fatmir Sejdiu, who was also Kosovo's president.
After Mr Sejdiu stepped down as president, he was ousted from the LDK leadership by the mayor of Pristina, Isa Mustafa.
Another party, the Alliance for the Future of Kosovo, has been weakened because its leader, former rebel Ramush Haradinaj, is being retried by the UN war crimes tribunal in The Hague.
Among Kosovo's most daunting challenges are an unemployment rate of 45% - even higher among young people - and one of the weakest economies in Europe.
While recognised by many Western countries, Kosovo is still not a member of the UN and its ethnic Albanian majority are under pressure to show they can build peaceful relations with the Serb minority.
Serbs now only number around 120,000 out of Kosovo's population of two million.
The vast majority of Serbs continue to live in enclaves guarded by Nato-led peacekeepers, and many are concentrated in the north, between the divided town of Mitrovica and the Serbian border.
Posters in Mitrovica have been calling on Serbs to boycott the election. "No to elections in the false state of Kosovo," reads one.
The US ambassador in Kosovo, Christopher Dell, has warned that an attempt to partition the north could spark renewed ethnic violence across the region, according to a series of secret diplomatic cables released by the Wikileaks website on Thursday.
Kosovo is holding its first parliamentary election since unilaterally declaring independence from Serbia almost three years ago.
The ethnic Albanian majority and small Serb minority remain largely estranged, more than a decade after a Nato-led conflict broke Belgrade's control.
Serbia has not recognised Kosovo's independence and most Serbs are expected to boycott the elections.
The EU says the election is important for Kosovo's hopes of entry.
During the campaign, institutionalised corruption and the dire state of Kosovo's economy have consistently topped lists of voter concerns.
Opinion polls have suggested that the Democratic Party of Kosovo (PDK) of the outgoing Prime Minister, Hashim Thaci, is in the lead but is unlikely to win an outright majority.
Its former junior coalition partner, the Democratic League of Kosovo (LDK), is mounting a strong challenge.
"Failure to act soon means losing northern Kosovo and will re-open the Pandora's Box of ethnic conflict that defined the 1990s," Mr Dell said.
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