The United States has long pushed the EU to drop its biotech ban, but the new rules were unlikely to satisfy Washington, which has said mandatory labeling of biotech products will be too costly for exporters.
The 626-member assembly backed two proposals that would allow European countries to lift a seven-year freeze on the introduction of new biotech foods.
The regulations require producers to trace genetically modified organisms at all stages of production and oblige supermarkets to label products containing more than 0.9 percent biotech material to say: "This product is produced from GMOs."
"This is a huge step forward in giving choice to citizens," said EU Health Commissioner David Byrne. "All foods whether prepackaged, or not, will have to be labeled."
The new laws also allow the 15 EU nations to set their own rules to prevent seeds from farms growing GM crops blowing on to fields of conventional or organic produce.
Environmentalists welcomed the vote. Greenpeace said it would give the EU, "the world's strictest and most comprehensive rules on the labeling of genetically modified organisms."
Skeptical European consumers can continue to shun biotech products, the group said.
"This vote is a slap in the face of the U.S. administration, which thought that by bullying ... Europe, and eventually others, would swallow its GMO policy," said Eric Gall, Greenpeace EU adviser on genetic engineering.
Washington has said the laws, as proposed, would continue to constitute an unfair trade barrier to biotech product imports.
Backed by Canada and Australia, the United States says the EU's cautious approach is based on unfounded health fears. The three have filed a complaint with the World Trade Organization to force Europe to lift the moratorium.
U.S. farmers estimate the European restrictions have cost them nearly $300 million a year in lost corn exports alone.
The moratorium on new biotech foods was introduced in 1998, in response to consumer fears about the possible health risks genetically modified products.