The sale of increasingly popular e-cigarettes will continue to be authorised although countries that classify them as medicinal products will be able to restrict their sale to pharmacies only.
After intensive lobbying from the relatively new electronic-cigarette industry, the European Parliament had refused to restrict their sale to pharmacies across the 28-nation bloc.
However nicotine content in both the devices and refills will be regulated and the European Commission will have to provide a report on potential health risks two years after the EU's anti-smoking measures come into effect.
About seven million Europeans have turned to e-cigarettes in the last four years.
The law, which must still be formally approved by the parliament and member states, will force tobacco firms to cover 65% of the packaging with health warnings.
With 70% of smokers beginning before the age of 18, and 94% before the age of 25, the new legislation aims especially to make cigarettes less attractive to youngsters.
Almost 700,000 Europeans die from tobacco-related illnesses each year - equal to the population of Frankfurt or Palermo - with associated health costs running at more than 25 billion euros (1,108 billion baht).