Cases where it may be considered necessary to restrict internet access include suspected terrorism, child pornography or copyright violation, according to a spokeswoman for the European Parliament.
The ruling will mean that the UK government's plans to introduce a 'three strikes' rule to tackle illegal downloading, where the cost of enforcement will fall largely on internet service providers, will go ahead as planned.
The EU's necessary "fair and impartial" process will be guaranteed under business secretary Lord Mandelson's proposals, because ISPs will have to send customers a series of notifications before they are able to cut off internet access.
There will also be an appeals process allowing individuals to speak out against their freedom being restricted, according to a Department for Business, Innovation and Skills spokeswoman.
The agreement on the Telecom Reform Package follows two years of debate on how the EU Telecoms Rules of 2002 should be reworked to make the European telecoms market more unified.
Disagreement at EU level on how to reform one of the five EU directives, which together make up the Telecoms Rules, caused the proposals to enter the EU's conciliation procedure in September. The directive related to whether an individual's access to the internet can be restricted in certain circumstances.
The conciliation phase is when the disagreeing bodies - the European Council, formed from ministers from each of the EU member states, and the European Parliament, which holds the EU's elected members - try to reach a compromise.
The compromise centred around the European Parliament's proposed change to the directive, known as Amendment 138, which reads: 'No restriction may be imposed on the fundamental rights and freedoms of end users without a prior ruling by the judicial authorities, notably in accordance with Article 11 of the Charter of Fundamental Rights of the European Union on freedom of expression and information.'
The adoption of Amendment 138 would have put a major damper on Lord Mandelson's proposals.
The decision last night in Brussels by the 27 MEPs and 27 member state representatives means that individuals' internet rights can be restricted without judicial involvement, a process described by human rights organisations as removing safeguards that protect citizen freedoms.
While all members of the conciliation delegation unanimously agreed on the text adopted last night, the Telecoms Reform Package still needs to enter the Parliament's third-reading vote, scheduled for 23 to 26 November.
In the third and final reading of the directive both the Parliament and Council may only approve or reject the joint text as a whole without any further amendments. Parliament needs a simple majority of votes cast, whereas the Council decides by a qualified majority.