In their summit conclusions, EU leaders said they welcomed the "significant process" made by Macedonia to meet EU prerequisites for membership talks - notably democratic politics and free-market economics.
No firm date was set for accession talks, but the leaders stressed that Macedonia must keep up the consolidation of its political and economic systems to bring them in line with European norms.
Tony Blair, the British prime minister, whose nation holds the EU presidency, confirmed the decision on Macedonia brought about by an agreement on an EU budget for 2007-13, which dominated a two-day summit in Brussels.
"That I hope again emphasises that again, in the future, we hope to see a Europe reunited in all it's aspects. Obviously, Macedonia is an important part of that vision," he said at a press conference in the early hours of Saturday.
Macedonia becomes the second former Yugoslav republic, after Croatia, to get a green light this year to open negotiations with Brussels eventually to join what is now a 25-nation bloc.
Slovenia joined last year.
Praise for reforms
Macedonia had been praised for its concerted effort to implement reforms in the wake of an uprising by its ethnic Albanian minority which threatened at the start of the decade to spiral into all-out civil war.
Landlocked between Kosovo, Bulgaria and Greece, it found itself on the tail end of Balkan wars which saw the demise of erstwhile communist Yugoslavia in the 1990s.
Macedonia has a population of
just two million
Its population of two million defied expectations that it would succumb to all-out war.
Five days ago, EU foreign ministers had failed to reach a consensus on Macedonia's candidacy, amid apparent opposition from France and a dispute over the bloc's budget.
The European Commission, which negotiates with candidate countries on behalf of the entire bloc, recommended a month ago that Macedonia be accepted as a candidate, but it declined to predict when membership talks would start.