Serbia was quick to respond that it was ready for constructive talks on all issues surrounding Kosovo but added that it would never accept that Kosovo's independence is a done deal.
Westerwelle said after talks with Prime Minister Mirko Cvetkovic that the future of the Western Balkans lies in the EU but underlined that the bloc would not take on new members that have festering external disputes.
"In our view, one can only be a member of the European Union if one aims for cooperation and is prepared to resolve neighbourly difficulties cooperatively," he told reporters when asked about Serbia's position on Kosovo.
Tensions between Serbia and Kosovo flared last month after the International Court of Justice (ICJ) issued a non-binding opinion that Pristina's 2008 declaration of independence from Serbia did not violate international law.
The dispute is heading for a showdown at the United Nations next month, with duelling resolutions that Belgrade and Pristina aim to present at the General Assembly.
Serbia has submitted a new resolution on Kosovo calling for fresh talks on all outstanding issues but at the same time condemning Kosovo's unilateral declaration of independence.
Despite widespread European criticism of the Serbian resolution the government here vowed it would not back down.
"Serbia will not withdraw the resolution it submitted to the UN General Assembly, however we are ready for constructive talks on all issues including the resolution," Foreign Minister Vuk Jeremic said after meeting Westerwelle.
He warned that "Serbia could not get behind a conclusion that does not question the independence of Kosovo."
Kosovo, with its two million inhabitants - more than 90 percent of them ethnic Albanians - unilaterally declared independence from Serbia in February 2008 after UN-brokered negotiations to resolve its future status failed.
The ICJ opinion was sent to the UN and Pristina hopes the General Assembly will back its secession despite Serbia's fervent opposition.
Meanwhile Serbia has submitted a new resolution on Kosovo calling for fresh talks on all outstanding issues but at the same time condemning Kosovo's unilateral declaration of independence.
Westerwelle, who also held talks with President Boris Tadic and opposition leaders, said during a discussion with students who have studied in Germany that Kosovo's breakaway was an established fact Serbia would have to accept.
"Kosovo's independence is reality," he said. "There is no point in denying the facts."
He said the EU was willing to help broker direct talks between Serbia and Kosovo to resolve the dispute and criticised Belgrade for taking the issue to the UN instead of Brussels.
"When someone in Europe wants to solve something including conflicts (...) the road should first lead to Brussels not to New York," he said.
Kosovo's independence has been recognised by 69 countries, including all major world powers except Russia and China.
Germany participated in a NATO air campaign to end the 1998-99 war between separatist Kosovo Albanians and Serbian strongman Slobodan Milosevic's security forces, in its first offensive military action since World War II.
It has the largest contingent with the NATO-led KFOR mission in Kosovo. In May it extended by one year its deployment but slashed its maximum troop level to 3,500.
Westerwelle is on a three-day tour of the former Yugoslavia. He is due in Sarajevo later Thursday.