After haggling into the night, the 25 leaders finally reached an agreement in Brussels on their 2007-2013 budget shortly after 2:30 am (0130 GMT) on Saturday.
"This is an agreement which allows Europe to move forward," British Prime Minister Tony Blair told reporters after what he called "amazingly complicated negotiations."
French President Jacques Chirac -- his perennial summit sparring partner -- and German Chancellor Angela Merkel echoed the sense of relief, both calling the deal "a good accord for Europe."
It includes an offer by Britain, which holds the European Union presidency, effectively to cut 10.5 billion euros off its long-cherished budget rebate.
That is an extra 2.5 billion euros on top of an earlier proposal which had been angrily dismissed as inadequate by most of Britain's EU partners.
The overall size of the budget for the financial period would also rise to nearly 862.4 billion euros, up by more than 13 billion euros.
"The key thing it allows the enlargement in the new member states to take place, with them being able to plan ahead with some certainty," Mr Blair said.
The deal also includes a clause promising a "full, wide-ranging" review of the bloc's spending plans in 2008/2009.
"It's a fair and reasonable package," Mr Blair told reporters. "It's up to people to make up their minds, frankly, whether they really want to do the deal or not."
The 2007-2013 spending package contains essential development aid for the poorer states from central and eastern Europe which joined the EU last year.
The biggest single stumbling block to an accord had been Britain's refusal to give up its annual rebate, negotiated back in 1984 when it was struggling economically but which last year amounted to an enviable five billion euros.
Mr Blair has been under heavy domestic political pressure not to give up more of the rebate, insisting any further cut should be linked to revision of the EU's generous farm subsidies system, which benefits France the most.
"The rebate remains in full on all spending," Mr Blair said, "other than the spending for economic development in the new European countries."
That formula allows the prime minister to say that London is not giving up on its fundamental right to the rebate, while also helping the 10 newcomers.