The permission was a big step forward for Kosovo to start competing at international level six years after it declared independence from Serbia.
"Following various meetings that have taken place since 2012, the FIFA Emergency Committee has today...confirmed a set of modalities of friendly matches involving clubs and representative teams of Kosovo," FIFA said.
"Clubs and representative teams of the (Football Federation of Kosovo) may not display national symbols (flags, emblems, etc.) or play national anthems."
Kosovo will still not be allowed to play matches against clubs and representative teams of countries of the former Yugoslavia until further notice.
Many athletes from Kosovo have chosen to move abroad and compete for adopted countries in order to take part in major sporting events which are still out of reach for Kosovo given that it is yet to become a member of the United Nations.
The country with more than 90 percent Albanian population got the go-ahead after a series of meetings with the leadership of the Serbian Football Association and FIFA president Sepp Blatter.
"The decision...represents a major boost for football development in Kosovo and it once again confirms the extraordinary power of our sport to bring people together," Blatter said.
The decision was hailed as a major victory in Kosovo and local media have already come up with candidates eligible to play for the national team.
"I congratulate Kosovo's entire sporting community for this achievement," the country's Prime Minister Hashim Thaci said on his facebook page.
"I express the hope that in the near future, the Kosovo Football Federation will be an equal member of UEFA and FIFA where today's limitations will not be valid anymore," he said.
Almost six years since Pristina declared independence, Serbia is still blocking Kosovo's membership of many international organisations.
Kosovo is recognised by more than 100 countries but it is not a United Nations member and is thus still unable to become a full FIFA and UEFA member, meaning that it is still ineligible to play competitive matches at club and international level.
(Additional reporting by Zoran Milosavljevic in Belgrade,; editing by Ed Osmond)
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