According to new proposals, nations which fail to take control of their debts could enhance the instability of the euro.
As such, the European Commission now wants to levy fines on those countries which fail to comply with debt obligations.
The budget rules request states keep their deficits within three per cent of GDP and debts below 60 per cent of GDP.
However, ministers agreed to give states a six-month grace period to enable them to comply with these targets.
Nicolas Sarkozy, the French president, said: "A country with excessive deficits which does not take the necessary correction measures within six months will be sanctioned.â
Under the terms, the majority of states within the EU will need to agree that a country is either already violating or on the way to violating the sanctions before any action is taken.
Herman Van Rompuy, president of the European Council, who led the talks said: âThe package agreed by the task force, when validated by the European Council next week, will be the biggest reform of the Economic and Monetary Union since the euro was created.â
By Jim Ottewill