The vote lifts the last major obstacle to a reform, which has for three years fuelled an often firey debate about how much cross-border competition Europe should have in its vast service sector.

"The European Parliament has put an end to three-year debate on a directive that ... inflamed a lot of emotions in the EU," the assembly's president Josep Borrell said.

He voiced satisfaction that a result had been found that allowed a "balance between opening up services and respecting social norms".

Following Wednesday's vote, the plans still have to be formally approved by member states, which is expected before the end of the year. Members will then have three years to adopt the new rules into their national legislation.

Although the services sector generates at least half the EU's economic activity and 60 percent of its jobs, it is still organised largely along national lines, unlike the market for goods, which is subject to fierce cross-border competition in Europe.

The European Commission has long argued that reform was necessary to boost competition, which would in turn fuel faster economic growth and more jobs.

"It is undeniable that the services directive is an essential element in our efforts to boost the European economy and unleash the potential of the internal market for services," Internal Market Commissioner Charlie McCreevy told members of the European Parliament in a debate ahead of the vote.