Welcoming the European Parliament's decision to approve a Bill to open the services market to cross-Border competition, European Commissioner Charlie McCreevy said yesterday it was "a big step forward".

Meeting in plenary session, the parliament accepted the draft services directive. This will now go forward to Council of Ministers, which is also expected to give its approval, allowing the provisions to come into operation by 2010.

As adopted, the legislation is a substantially watered-down version of the original proposal from Mr McCreevy's predecessor as internal market commissioner, Frits Bolkestein.

The controversial "country of origin" principle was dropped. This would have allowed firms to offer services in another member state on the basis of labour regulations in their home country. The deletion of this element was accompanied by the exclusion of financial services such as banking, credit, loans and insurance; healthcare; public transport and port services; audiovisual services; temporary agencies; and security services.

Labour regulations on working hours, minimum pay, holidays and the right to strike or engage in collective bargaining will not be affected by the directive.

Sinn Féin MEP Bairbre de Brun, who voted against the directive as a member of the left-wing GUE/NGL group, said it would "deny millions of people the quality public services they deserve".

Dublin MEP Proinsias De Rossa of Labour, who voted in favour, said: "This result defends social Europe while opening up the European internal market in services."

At a press conference after the vote, Mr McCreevy said the directive would add value to the internal market.