The Organisation for Security and Cooperation in Europe said Sunday's second-round voting in mayoral elections occurred in a "generally orderly manner" but was fraught with problems, including instances of ballot-box stuffing and proxy voting.
Macedonia, a tiny landlocked country of 2.1 million people, is struggling to improve democratic institutions as part of an effort to join Nato and, eventually, the European Union.
The first round of local elections was held on 13 March. The municipal voting is a test of reforms drawn up after a 2001 insurgency by ethnic Albanian rebels to seek greater autonomy from majority Macedonian Slavs.
Ethnic Albanians make up about a quarter of the country's population.
Many of the voting problems occurred in western parts of the country where rival ethnic Albanian parties - the DPA and DUI - accused one another of trying to disrupt the elections.
"The persistent and widespread irregularities ... give rise to serious concern, threaten the integrity of the whole process, and must be addressed as a matter of urgency," Julian Peel Yates, head of the 260-member OSCE observer mission, said.
Ethnic Albanian parties traded
charges over election disruption
The OSCE, EU officials, and the US State Department had urged the Macedonian government to sort out first-round problems.
But Monday's report by the OSCE said procedures were "bad" or "very bad" in 14% of the polling stations observed, including intimidation outside polling stations.
It cited 30 cases of ballot-box stuffing and more than 50 cases of proxy voting.
Eighteen mayors were elected outright on 13 March. On Sunday, Macedonians voted in run-offs for 57 mayoral races, while first-round voting was repeated at 33 polling stations in 10 municipalities - including parts of the capital Skopje and Tetovo, the country's second-largest municipality.
Two men were arrested near the northern town of Kumanovo, accused of tampering with ballot boxes, while four others were wanted over a separate incident in southern Macedonia.