The European Union has offered Turkey a possible three billion euros ($3.41bn) in aid and the prospect of easier travel visas and "re-energised" talks on joining the bloc in return for its help stemming the flow of refugees to Europe.
EU leaders at a summit in Brussels said early on Friday that they agreed on an "action plan" with Turkish President Tayyip Erdogan to cooperate on improving the lives of two million Syrian refugees in Turkey and encouraging them to stay put.
They also agreed to coordinate border controls to slow the influx of refugees crossing Turkey from Asia.
Already hosting more than two million Syrians, Turkey has become a launching point for refugees - among them Syrians, Iraqis, Afghans and others - who set out to make it to Europe, often by way of dinghy boats in the Mediterranean Sea.
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Though the plan put no figure on "substantial and concrete new funds" the EU would offer, German Chancellor Angela Merkel said the figure of 3 billion euros, which EU officials said Ankara had requested, had been discussed and seem reasonable.
"Our intensified meetings with Turkish leaders ... in the last couple of weeks were devoted to one goal: stemming the migratory flows that go via Turkey to the EU. The action plan is a major step in this direction," said summit chairman Donald Tusk, expressing "cautious optimism".
In formal conclusions agreed by the 28 national leaders at a meeting that ended after midnight, Turkey was offered an accelerated path to giving its citizens visa-free travel to the EU, provided it met previously agreed conditions.
Merkel, who will visit Istanbul for talks with Erdogan on Sunday in a political gesture two weeks before a Turkish general election, said it was clear that Europe's efforts to filter and process refugees would not work without Turkey's cooperation.
French President Francois Hollande stressed that Turks were not getting visas on easier terms. One condition is that Ankara must first stop granting such easy entry to Pakistanis, Afghans and others who end up heading to Europe.
It must also first sign and implement a previously agreed deal to take back from Europe migrants who fail to win refugee status. "There must be no misunderstandings," Hollande said.
European governments are wary of granting full visa-free access to 78 million Turks. Any liberalisation is likely to be limited at first to business travellers and students.
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Meanwhile, the Hungarian government announced Thursday it had completed construction of a wall along its southern border with Croatia, to stem the influx of refugees.
Croatia said more than 4,800 people had entered on Wednesday, bringing the overall number of arrivals in the EU member state to nearly 175,000.
There are growing fears that Europe's passport-free Schengen zone could collapse as countries try to curb the huge numbers of refugees criss-crossing the continent.
Leaders will also discuss a possible safe zone that Turkey wants to establish on its border with war-torn Syria.
As leaders gathered, seven refugees, including four children, drowned Thursday after their boat collided with a Greek rescue vessel near the Greek island of Lesbos - the current point of entry for 20 percent of refugees arriving in the EU.
More than 3,000 refugees have drowned while crossing the Mediterranean this year.