MEPs have voted to block an agreement to allow US authorities to access financial data.
A deal has been secured between the EU and the USA to allow data contained in the SWIFT financial messaging system to be used for counter-terrorism purposes.
However under new competencies granted by the Lisbon Treaty, it must be approved by the European Parliament before it can come into effect.
Socialist group leader Martin Schultz, and his UK colleague Claude Moraes both refused to back the plans, with Mr Schultz accusing the US of treating MEPs as "political dwarfs".
Speaking on behalf of the ECR group, British Conservative MEP said the manner in which the deal had been carried out "must never be repeated again", and called for a final decision to be deferred instead of rushed through.
The new Home Affairs Commissioner Cecilia Malmström admitted she was having an "interesting" first day in the job, but told MEPs that rejection of the agreement would be a serious blow to EU security.
Speaking on behalf of the Council of Ministers, Alfredo Pérez Rubalcaba reassured MEPs that dealings with the European Parliament would change and improve in the future.
SWIFT handles millions of transactions daily between banks and other financial institutions worldwide. It holds the data of some 8,000 banks and operates in 200 countries.
The US started accessing Swift data, based in Brussels, after the September 11 attacks, but the fact that the US was secretly accessing such data did not come to light until 2006.
was held on 11 February 2010 where the agreement was formally blocked by 378 votes to 196.