According to the new rules of labeling, traditional vodka can only be made from grain or potatoes.
Vodkas made from other ingredients can only use the name if their composition and origin is clearly indicated on the label, according to new spirit labeling rules approved by the parliament.
Parliamentarians from traditional vodka producing countries, such as Finland, Poland or Sweden, had pushed for stronger rules that would have included molasses among the ingredients allowed but banned vodkas made from anything else sugar beet or fruits, for example from using that name.
But the compromise rules, approved by a show of hands, have been backed by all EU governments with the exception of Poland and are likely to be endorsed by EU ministers later this month, officials said. Approval by a qualified majority of the EU's 27 member states is needed for the new rules to take effect.
The rules replacing guidelines from 1989 were needed to ensure the quality of spirit drinks and protect their "geographic origin" indicator that helps sell them and guarantees their exclusivity, the EU said. They also define the labeling of products such as the Czech Republic's Slivovice, Greece's Ouzo, Germany's Rum-Verschnitt, among others.
The current EU definition states vodka is "a spirit drink produced from ethyl alcohol of agricultural origin".
Some parliamentarians from the so-called 'vodka belt,' spanning from Sweden across the Baltics to Poland and accounting for some 70 percent of production and 65 percent of consumption in the EU, wanted the notice indicating composition of nontraditional vodkas to cover two thirds of the label, but they were outvoted.
"We have made vodka out of potato and grain for over 500 years. When we became EU members in 1995 we were told that vodka would have a tight definition, just like rum, just like whisky, just like grappa. We don't want vodka to be some kind of alcoholic wastebasket," said Finnish deputy Alexander Stubb.
Finland's government has, however, already said it would back the looser rules.
Pitched against traditionalists was a group led by Britain, the Netherlands, France and Austria and backed by London-based multinational drinks producer Diageo which take a more relaxed view of what can go into vodka, for example grapes, beets or citrus fruit.
The booming world vodka market is worth around US$12 billion ((EUR8.95 billion) in annual sales.
Experts had warned that the EU moved to restrict vodka ingredients effectively expelling vodka producers from other continents from the European market a trade war could ensue.
"It would have been a WTO (World Trade Organization) problem for which reason I don't think the Council (of EU Ministers) could ever have adopted it. A lot of vodkas from the United States, Brazil and other countries are made from other materials, and those countries would almost certainly have complained," said Chris Scott-Wilson, a spokesman for the European Vodka Alliance, which was campaigning to keep a wider definition.