German Chancellor Angela Merkel, whose country holds the rotating EU presidency, said the agreement reached at a summit in Brussels would usher in a new era in the fight against global warming.

Merkel said she felt "no little satisfaction that today we are able to go for such ambitious and credible targets" and she challenged other countries to follow the EU's lead.

The accord's overarching achievement is to commit the 27-country EU to reduce emissions of carbon dioxide by 20 percent by 2020, compared to 1990 levels.

As part of that, it obliges member countries to make renewable energies, such as solar and wind power, the source of 20 percent of the total energy consumption across the bloc by 2020. The current level is just 6-7 percent.

There was also a political commitment that eco-friendly biofuels, made from plants, should make up 10 percent of total vehicle fuel in Europe by 2020.

"These are a set of ground-breaking, bold ambitious targets for the European Union," said British Prime Minister Tony Blair. "It gives Europe a very clear leadership position on this crucial issue facing the world."

The talks had broken up overnight with divisions over setting a "binding" target for the use of renewables, but the leaders agreed a compromise that accords member states some flexibility.

Countries like Poland and the Czech Republic depend heavily on carbon energy sources like coal and had complained that the renewable target was overly ambitious and prohibitively expensive.

To bring those states on board, the agreement stressed that "differentiated national overall targets" would be set, taking into account the potential of each member state.

Merkel said the pact gave her a mandate to press major world polluters, as the EU would offer to reduce emissions by an additional 10 percent if countries took commensurate measures.

"We are going into negotiations offering 30 percent if international partners are prepared to go along with that, so it is a genuine offer in what is an extremely important topic for the whole of humanity," she said.

She will have a chance to show off the EU accord to other world leaders, including US President George Bush, at a G8 summit in Germany in June.

But tough questions remain to be answered in Brussels.

The European Commission must work out how much of the renewable energy burden each state will have to bear; a cumbersome, deeply technical and controversial task that it hopes to complete in the autumn.

"It will be a huge job, huge job from a legal and a technical point of view," acknowledged European Commission President Jose Manuel Barroso.

The accord represents a minor victory for France by having nuclear power -- which meets some 40 percent of its total energy needs -- recognised as one way to reduce carbon dioxide emissions.

The agreement noted the Commission's assessment of the contribution of nuclear energy in "meeting the growing concerns about safety of energy supply and carbon dioxide emissions reductions."

However, it also highlighted safety concerns, stating that "nuclear safety and security" should be "paramount in the decision-making process."

Despite the celebrations, Green groups called the 20 percent target for carbon emissions reduction inadequate and argued that the 30 percent level was the bare minimum required.