Romania and Bulgaria have welcomed the announcement that they will be admitted to the EU in January 2007, albeit under strict conditions.
Bulgarian Prime Minister Sergei Stanishev said the move was the final fall of the Berlin Wall for his nation.
His Romanian counterpart, Calin Tariceanu, said his people should be proud of themselves.
European Commission President Jose Manuel Barroso said both countries had made enough progress to join the union.
But they will be checked for progress in curbing organised crime and corruption, and ensuring food safety and the proper use of EU funds.
The conditions are tougher than those imposed on previous new members.
The BBC's Oana Lungescu in Strasbourg says they are intended both as a reassurance for EU citizens, only half of whom support further enlargement, and as a warning to Turkey and the Balkan nations still lobbying for EU membership.
The commission's report confirms that after seven years of talks, Bulgaria and Romania are able to take on the rights and obligations of EU membership.
Reading the report, Mr Barroso said the two nations' entry would be a "historic achievement".
"Bulgaria and Romania have carried out an extraordinary reform process and they have gone through a remarkable transformation," he said.
The two countries missed out on the EU's big eastward expansion in 2004, which saw the EU grow to 25 member states.
Correspondents say they will be delighted that they can get in on schedule before Mr Barroso puts a block on further expansion.
JOINED IN 2004
"This is the genuine and final fall of the Berlin Wall for Bulgaria," said Mr Stanishev.
Mr Tariceanu said: "Romanians have a reason to be proud of themselves."
But he warned his people: "It would be a typical Romanian mistake to say we have our bags already in the cart and we no longer have obligations."
The commission president said there were a number of areas where further progress was needed in the months leading to accession and beyond.
Unless Bulgaria cracks down on organised crime, legal decisions taken by its courts could be disregarded in the rest of Europe.
Both countries will have to report every six months on progress in fighting corruption.
By March, they also need to set up agencies to handle millions of euros worth of EU farm aid, or risk losing a quarter of the cash.
Both will face food export bans due to the prevalence of animal diseases like swine fever, while Bulgarian planes could be banned from flying into EU airspace until the country improves its air safety standards.
There could also be restrictions on migration to other EU countries for up to three years.
An EU official said the commission did not want to punish Bulgaria and Romania, but to make them work harder to carry out reforms.
Mr Barroso has said the EU cannot go on with further expansion until it decides what to do about its stalled constitution.
The rules of the European club can currently cope to 27 members at most.
However, experts say they could be tinkered with to squeeze Croatia in before a major treaty change.
"It would be unwise to bring in other member states apart from Romania and Bulgaria," Mr Barroso said on Monday.
"There are some limits to our absorption capacity."