The self-proclaimed republic of Nagorno-Karabakh announced on Thursday it would cease to exist, after a military defeat by Azerbaijan followed by an exodus of over half of the enclave's population.

The separatist leader of the territory issued a decree ordering the dissolution of all state institutions by the end of the year and said Nagorno-Karabakh "ceases to exist" as of January 1, 2024.

The dissolution will bring to an end three decades of Armenia-backed self-rule for Nagorno-Karabakh, a majority ethnic Armenian enclave inside the internationally recognized borders of Azerbaijan.

The decree said residents should "familiarize themselves with the conditions of reintegration" offered by Azerbaijan and make "an independent and individual decision" on whether to stay.

Separatist leader Samvel Shakhramanyan also said that an agreement struck with Azerbaijan would ensure the "free, voluntary and unhindered passage" for all those who wanted to leave.

He said the decision to dissolve the state was "based on the priority of ensuring the physical security and vital interests of the people of Artsakh", the Armenian name for the region.

Armenia and Azerbaijan have fought two wars over Nagorno-Karabakh, in which tens of thousands have died.

Last week, Nagorno-Karabakh separatists laid down their arms following a lightning military offensive by Azerbaijan.

Tens of thousands of ethnic Armenians have since fled the enclave to Armenia.