After weeks of negotiations, the government in Germany has reached a deal with the opposition enabling the EU's new budget treaty to be ratified by parliament next week.
A two-thirds majority is needed in parliament to pass such laws.
All 27 EU states apart from the UK and Czech Republic accept the pact, which is due to take effect in January 2013.
The fiscal compact will punish reckless accumulation of debts by eurozone countries.
Under Thursday's deal, the opposition also approved the European Stability Mechanism, a 500 billion euro bailout fund, due to be launched next month.
Germany will account for 27% of contributions to the ESM, paying 21.7 billion euros in cash and providing guarantees worth a further 168.3 billion euros.
Under the deal, the Social Democrats obtained a commitment from the government to push for a European financial transaction tax.
