The 16 members of the bloc will be able to access up to â¬440 billion worth of loan guarantees put up by the countries, with a further â¬60 billion placed in the pot by the European Commission (EC).
Another â¬250 billion will also be provided by the International Monetary Fund (IMF) as part of the package.
EC funding will be available to countries which are experiencing financial difficulties "caused by exceptional circumstances beyond their control", said Spanish finance minister Elena Salgado.
Under the terms of the agreement, the eurozone members' money has been guaranteed on a pro-rata basis for a three-year period and will be known as the European Financial Stabilisation Mechanism.
Ms Salgado said the deal, which was reached after 11 hours of negotiation, will stabilize the economic situation in Europe.
"Our conclusions also reiterate yet again the need for progress to be made on regulating the financial system, on oversight and the supervision of the financial system, in particular derivatives and the role of rating agencies," she added.
Global markets have reacted positively to the announcement of the agreement, with trading in London up by 3.7 per cent, while the position of the euro also improved, reports BBC News.
Speaking after the deal had been agreed, Jose Manuel Barroso, president of the European Union Commission, said: "The eurozone is certainly regaining confidence.
"Our fundamentals are certainly good."
Last week, the euro hit a 13-month low against the US dollar as a result of fears about the economic viability of several countries which use the currency.
Concerns have been voiced about the possibility of the likes of Spain, Portugal, Italy and Ireland experiencing similar problems to Greece, which has been forced to seek a â¬110 billion bailout in recent weeks.
By Claire Archer