Polls opened on Sunday morning in the disputed referendum in Republika Srpska on the entity’s national day despite objections from the EU and the US.
Voters are casting ballots at about 1,900 polling stations across the mainly Serb entity, one of two in Bosnia and Herzegovina.
The ballot papers ask voters whether or not they support the celebration of the national holiday, the Day of Republika Srpska, on January 9. Polls are open from 7am to 7pm.
Republika Srpska's public news agency reported that just over 1.2 million people are eligible to vote.
The vote was organised in protest at a decision by the state-level Constitutional Court, which ruled last years that the Day of Republika Srpska discriminates against non-Serbs because January 9 is also a Serbian Orthodox religious holiday, and is therefore unconstitutional and should not be held.
The holiday marks the day in 1992 when Bosnian Serbs unilaterally voted for independence from Bosnia and Herzegovina.
The referendum itself has been ruled unconstitutional by the state Constitutional Court, and Bosniaks and Western diplomats say it undermines the Dayton Peace Accord which ended the 1992-95 war in the country.
The Russian ambassador to Bosnia disagrees however and supports the entity's right to stage the vote.
Republika Srpska meanwhile issued an open letter to ambassadors on its website insisting the vote was legal.
“The referendum is fully in accord with applicable law," the letter said.
Western diplomats and Bosniak politicians fear the referendum could be a prelude to a vote on secession in Republika Srpska, which would greatly heighten tensions between Bosnia’s three main ethnic groups and particularly between Bosniaks and Serbs.
Bosniaks have been urged by their political leaders to boycott the referendum.
The 2,000 voting committees have scrambled to make hasty arrangements for the plebiscite, which will cost the already cash-strapped entity an estimated 700,000 euros.
As of the end of the week, voter numbers were still unknown. Authorities in Banja Luka, the main city in Republika Srpska, on Thursday said they were still waiting for the entity-level committee to deliver a copy of the electoral roll.
Bosnia’s Central Election Commission refused to hand over voter lists to Republika Srpska, forcing referendum officials to compose their own electoral roll with the help of the entity’s own institutions.
The president of the Republika Srpska Referendum Committee, Sinisa Karan, told BIRN that citizens of Republika Srpska living abroad will be able to vote in five of the entity’s eight representative offices in foreign countries.
However, a complete list of the centres for voting published on the Republika Srpska government’s website on Tuesday listed seven countries: Serbia, Germany, Switzerland, Austria, Russia, Belgium and Holland.
Bosnia’s third administrative unit, the Brcko District, has not given Republika Srpska permission to hold the referendum there.
Republika Srpska citizens in Brcko have to cast their ballots in the nearby municipalities of Donji Zabar and Bijeljina.