Nagorno-Karabakh, a lush mountainous area of the southern Caucasus located inside the republic of Azerbaijan, is the site of the first European civil war sparked by the disintegration of the Soviet Union.

A ceasefire was signed in 1994, but about 610,000 people remain displaced across Azerbaijan and Armenia.

After years of talks, the political leaders of the opposing nations have still not reached a solution over the region's status. Armenia supports its self-determination, while Azerbaijan claims the territory as its own.

Nagorno-Karabakh declared independence in 1991, and a 2006 referendum approved a new constitution and referred to it as a sovereign state. But no country recognises the small would-be republic, not even its neighbour Armenia which remains its biggest economic sponsor.

The history and complexity of the Nagorno-Karabakh conflict is hinted at in its name, a Russian-Turkish-Persian compound which means "mountainous black garden". But the ethnic Armenians who inhabit the area today prefer to call it Artsakh, or "strong forest".

Armenians and Azerbaijanis bitterly dispute both the original ethnic make-up of the region and its history. While both lay claim to it, academics believe the area has been ethnically mixed for hundreds of years.

The arrival of the Red Army in 1920 and the conversion of both Azerbaijan and Armenia to Soviet Socialist Republics went some way towards dampening nationalist ardour.

Three years later, the USSR designated Nagorno-Karabakh as an Autonomous Region within the Azerbaijan Soviet Socialist Republic, in spite of previous assurances that the territory would be given to Armenia. At the time, more than 90 percent of Nagorno-Karabakh's population was ethnic Armenian.

The resentment of the ethnic Armenians simmered throughout the Soviet period, until the slow disintegration of the USSR and the accompanying economic hardship brought nationalist feelings to the fore once again.

However, the last Soviet census in 1989 showed that intermarriage and migration had changed the ethnic mix of the area since the formation of the Nagorno-Karabakh Autonomous Region. The population was estimated at 192,000 - three quarters Armenian and around a fifth Azerbaijani.

The advent of glasnost and perestroika, the policies of openness and reform introduced by former Soviet leader Mikhail Gorbachev, in 1988 encouraged the Nagorno-Karabakh assembly to call for unification with Armenia. This exacerbated ethnic tensions and led to a number of skirmishes, including one in which two young Azerbaijani men were killed by Karabakh Armenians.

When this incident was reported in the Soviet media, it sparked an outbreak of ethnic violence in the Azerbaijani city of Sumgait, where an estimated 30 Armenians were killed.

This in turn led to attacks on ethnic Azerbaijanis in Armenia, and encouraged hundreds of thousands of people of both ethnicities to leave their homes and seek refuge in their ancestral countries.

In 1991, Nagorno-Karabakh then declared itself a republic in its own right, prompting the Azerbaijan Supreme Soviet to revoke its autonomous status. This led to a referendum within Nagorno-Karabakh, which was boycotted by the area's ethnic Azerbaijanis. The result was overwhelmingly in favour of unification with Armenia.

Full-scale war broke out in early 1992, following the collapse of the Soviet Union. The Azerbaijani forces initially had the upper hand, but met with fierce resistance from the Karabakh Armenians, who soon drove the Azerbaijanis out of Nagorno-Karabakh.

Both Turkey and Azerbaijan swiftly imposed a trade blockade on Armenia, demanding it withdraw its support from the Nagorno-Karabakh Armenian separatists.

By the time a ceasefire agreement was signed, Karabakh Armenian forces had captured and occupied large swathes of Azerbaijani territory in addition to Nagorno-Karabakh.

It is estimated that more than 35,000 people were killed in the war, which also forced more than a million people - including 600,000 ethnic Azerbaijanis and more than 300,000 ethnic Armenians - to flee their homes. Today, no ethnic Azerbaijanis remain in Nagorno-Karabakh.

About 610,000 internally displaced people and refugees are living in temporary accommodation in Azerbaijan and Armenia. The vast majority - between 573,000 and 603,000, according to the Internal Displacement Monitoring Centre (IDMC) - are in Azerbaijan.

For years, displaced people were offered little opportunity to reintegrate into Azeri society, mainly for political reasons. If Azerbaijan's President Ilham Aliyev had ensured their resettlement, his supporters might have interpreted it as an admission the refugees could never go home, and that the contested land was part of Armenia.

More recently, however, the Azeri government has shown more political will to address the needs of displaced people. It has closed the worst displacement settlements and resettled some people in new homes until they can return to Nagorno-Karabakh. But the new homes are in poor and isolated areas, sometimes near the firing line between Armenian and Azerbaijani forces, says IDMC. Moreover, the displaced don't own the houses, some of which are of poor quality and located far from basic services.

Many of those who have not been provided with housing continue to live in overcrowded and insecure mud houses, hostels and public buildings. Poverty and unemployment remain pressing problems, especially for young people.

IDMC says donor funding for international humanitarian organisations working with displaced Azeris has fallen in recent years due to rising oil revenues, increased government support for IDPs and the failure to solve the conflict.

The situation for displaced people is better in Armenia, where the authorities have been carrying out a series of naturalisation programmes over the past decade. Most of the 360,000 ethnic Armenians who fled Azerbaijan for Armenia at the height of the war have now settled in their new country, although 4,000 people are still classed by the U.N. Refugee Agency (UNHCR) as "causing concern".

Until a final settlement on the future of Nagorno-Karabakh is reached, there is little or no opportunity for ethnic Armenians and Azeris to return to the areas they left.

Many Caucasus watchers are concerned that the chances of their successful return - and any possibility of peaceful multi-ethnic integration in the region - are being damaged with every year that passes without a resolution.

Many unsuccessful attempts have been made to resolve the conflict since the ceasefire agreement was signed in 1994.

The composition of the talks has changed since the leaders of Armenia, Nagorno-Karabakh and Azerbaijan first met in Moscow in August 1994.

At the time, Robert Kocharyan was the popularly-elected de facto leader of the breakaway republic. He was later elected president of Armenia in early 1997 and was replaced as Nagorno-Karabakh's leader by Arkady Gukasyan, again in a popular but internationally unrecognised vote.

Since then, Azerbaijan - headed by the late President Heidar Aliyev and his son and successor Ilham - has refused to allow Nagorno-Karabakh to be represented at the talks, choosing to deal only with Armenia.

This has presented difficulties for both sides as well as for international mediators.

The process is being overseen by the Minsk Group - an ad hoc body of nations set up in 1992 by the then Conference for Security and Cooperation in Europe, later the Organisation for Security and Cooperation in Europe (OSCE).

Separatists in Nagorno-Karabakh say the West's decision to back independence for former Serbian province Kosovo sets a legal precedent that could bolster their own bid for independence.

Nagorno-Karabakh held elections in July 2007 for a new leader to replace Gukasyan who stepped down after 10 years. Bako Saakyan, former head of security, was elected. The polls were not recognised internationally.

Hopes of an agreement rose ahead of talks in February 2006, hosted by France. The Armenian and Azerbaijani presidents met twice in 2005, and their respective foreign ministers maintained regular contact.

But that optimism proved premature. A follow-up Armenian-Azerbaijani summit in Bucharest in June 2006 also ended without agreement. Meanwhile, the level of impatience and rhetoric continued to rise across the affected region.

Azerbaijan's President Aliyev has said he will never allow Nagorno-Karabakh to achieve independence or merge with Armenia without significant compromises from the Armenian government, and insists the Karabakh Armenians return the territory they won by force in 1992.

The level of frustration is especially high in Nagorno-Karabakh, which remains in limbo while its two large neighbours fail to agree on its future.

Nagorno-Karabakh leaders have several times said talks will continue to founder until the region is once again allowed to participate.

In an internal referendum in December 2006, 98.58 percent of the Nagorno-Karabakh population voted in favour of setting up the region as an independent country, although the vote had no international recognition.

Optimism rose again in early 2007, with international mediators saying both sides were close to agreement on the basic principles of a settlement plan, but 2008 came and went with no resolution. Both sides, however, agreed in November 2008 to intensify their efforts to find a political settlement, and in May 2009 said they had made significant progress.