Nielsen and Olesen showed that perturbative vacuum with uniform chromomagnetic field in one space and one color direction is unstable. This instability is called Nielsen-Olesen instability (NOI), and leads to formation of a ‘spaghetti of flux tubes’ as a model for non-perturbative vacuum and confinement. We re-examine this instability in presence of color sources, quarks and gluons, at a finite temperature and find that at sufficiently high temperature NOI is stabilized due to an ‘effective mass’ of gluons arising through plasma effects. This explains how a QGP with no confinement effects may exist at high temperature. As the temperature is lowered, NOI reappears at a valueT=T_c, which is very close to confinement-deconfinement transition from hadrons to QGP..