European leaders have named Portuguese Prime Minister Jose Durao Barroso as the next president of the European Commission, the union's executive.
Durao Barroso champions both a strong Europe and good US ties
The appointment was confirmed at a special summit in Brussels on Tuesday, after a tricky search for a replacement for Italian Romano Prodi.
A number of leading candidates have fallen by the wayside because different EU blocs found them unacceptable.
Mr Durao Barroso emerged as a compromise candidate.
He said he was "very happy and proud" to have been unanimously appointed by EU leaders.
UK Prime Minister Tony Blair hailed the nomination, saying his Portuguese counterpart supported economic reform and strong ties with the US.
"He's the right man. He's an excellent candidate for the EU," Mr Blair told reporters after the summit.
The appointment was also welcomed by French President Jacques Chirac, who called Mr Durao Barroso "a competent man, a man of dialogue".
Earlier, Prime Minister Indulis Emsis of Latvia - one of 10 new EU members - said the new European Commission president would "be able to sustain good trans-Atlantic links, which is very important for us".
He added: "He is from a small country which is also good for us."
At an EU summit earlier this month, contrasting views between Germany and France on one side and Britain and Italy on another meant the 25 EU leaders failed to choose a new commission chief and had to postpone their decision.
Correspondents say Mr Durao Barroso is seen as sufficiently pro-European for the French and Germans, but, as a supporter of the war in Iraq, is also acceptable to Britain, Italy and Poland.
A 48-year-old centre-right figure, he leads Portugal's coalition government and has served as foreign minister.
He underscored his support for the US campaign in Iraq by hosting a summit with the US, Britain and Spain before last year's invasion.
At the Brussels summit, the EU leaders also reappointed Javier Solana as foreign policy "high representative".
They said they expected him to become Europe's first foreign minister when the EU constitution agreed this month comes into force - which will happen once all 25 member-countries have ratified it.
Irish Prime Minister Bertie Ahern, whose country holds the EU's rotating presidency until 30 June, announced after the summit that the constitution would be signed in Rome in November.
Mr Durao Barroso's appointment still has to be approved by the European Parliament which will vote on the issue in mid-July.