Other sectors of the negotiations will go ahead but not be concluded until Turkey complies with its obligations on Cyprus.
They also agreed in principle on steps to end the economic isolation of northern Cyprus, but that accord is to be confirmed in January, diplomats said.
EU countries are split between a few who would shed no tears if talks with the large, Muslim nation collapsed, and others who say Europe must embrace a key strategic partner.
The latter say the inclusion of Turkey will help bridge the Western and Islamic worlds and secure a future energy hub.
Earlier, Frank-Walter Steinmeier, the German foreign minister, raised the spectre of Turkey dominating the regular EU summit on Thursday and Friday when he said: "We must not destroy in a few days something that has grown over many years."
Supporters of Turkey had said the EU executive's proposal was too harsh.
Margaret Beckett, the British foreign secretary, wrote in the Turkish Sabah newspaper: "We must not make a mistake here because if we push Turkey away, in the end it will lead to a much poorer, weaker and less secure EU."
Turkey has said it would lift the embargo on Cyprus-registered ships and open its airspace to Cypriot planes only if the EU made good on its pledges to ease the economic isolation of the Turkish Cypriot state in northern Cyprus.
Last week, Turkey offered to open one major port and possibly an airport to traffic from Cyprus and said it would do more if the EU allowed direct trade with the Turkish Cypriots.
EU president Finland said that was not enough and Cyprus rejected the offer.
The EU admitted Cyprus, represented only by the Greek Cypriot government, to the union in 2004. Monday's talks will also focus on the Balkan states, including EU relations with Croatia and Serbia.