The European Parliament has voted to accept a European directive which will open its huge services industry to increased cross-border competition.
The vote marks the acceptence of one of the most contentious pieces of EU legislation in years.
Parliament adopted the new rules after rejecting attempts by the hard left and Greens to amend or scrap the proposal.
The proposed regulations will enable providers of services as diverse as catering, software and plumbing to ply their trade throughout the 25-nation bloc with fewer restrictions. The new rules would come into effect in early 2010.
The regulations will enable providers of services as diverse as software, catering and plumbing to ply their trade throughout the 25-nation bloc with fewer restrictions.
"We are here today making internal market history," said Finnish Industry Minister Mauri Pekkarinen, whose country holds the EU presidency.
But critics say the new rules are a "victory for ultra liberalism" or are so vague it will be up to the courts to decide ultimately how effective they will be.
The issue pitted wealthy western European states keen to protect their companies from cheaper foreign labour against eastern European newcomers eager to break into their markets.
Services make up 70 percent of Europe's economy but the bulk of the sector is nationally based due to obstacles to cross-border competition that the new rules aim to reduce.
EU Internal Market Commissioner Charlie McCreevy said the new rules were crucial to fostering entrepreneurship by making it quicker and cheaper for businesses to expand in the bloc.
After negotiations, EU ministers in May diluted a more sweeping version of the reform proposed by the European Commission that sparked street protests and opposition from some EU countries, France in particular.
The services directive is one of the EU's most important legislative initiatives in this decade.
EU business lobby UNICE wanted a more radical reform.
"We will be monitoring the implementation of the rules. For business, it's just the beginning," UNICE Secretary General Philippe de Buck said.