EU defence ministers, meeting in Italy over the weekend, agreed to further and substantially harmonise their armed forces by the end of the decade.
Meeting informally in Rome, ministers agreed to significantly increase their interoperability by 2010, pooling resources, doctrines and equipment.
In a statement after the meeting, the EU’s high representative, Javier Solana said member states need to ensure they are able to "work seamlessly together and with key strategic partners".
Ministers agreed that whatever EU capabilities develop, they should have the maximum synergy with Nato.
Mr Solana also called on member states to "develop a strategic culture that favours early, rapid and, where necessary, robust intervention".
He added that it was imperative that Europe "shift emphasis from quantity to quality, both in terms of force contributions and in terms of assessment".
The agreement sets a new deadline for military cooperation just months before the end of the 2003 deadline for the Helsinki goals.
At Helsinki, EU members agreed to supply up to 60 000 troops at 60' days notice for peacekeeping operations lasting up to one year.
To facilitate this next phase of co-operation, ministers are backing the creation of an EU capabilities agency.
According to reports some EU member states say they would back Dr Solana to head the agency which may be set up as soon as December.