In a move that could set the limits of European integration, EU leaders have agreed to define precisely the extent of the Union's powers and the relationship between Brussels and national governments.
Under intense pressure from the German government, the leaders agreed to launch a process of discussion that will lead to a further inter-governmental conference in 2004, the year in which Ireland next holds the EU presidency.
In a Declaration on the Future of the Union, drafted by Sweden and Belgium but based on an idea first suggested by Germany and Italy, the leaders call for a deeper and wider debate about the future development of the EU.
"In 2001, the Swedish and Belgian presidencies, in co-operation with the Commission and involving the European Parliament, will encourage wide-ranging discussions with all interested parties; representatives of national parliaments and all those reflecting public opinion; political, economic and university circles, representatives of civil society, etc," the declaration says.
The agreement to hold an inter-governmental conference in 2004, which Ireland initially opposed, was a key demand of the German Chancellor, Mr Gerhard Schroder.
Germany's powerful federal states, fearful that a trend towards more inter-governmentalism within the Union could weaken their influence in Europe, had threatened to block the ratification of the Nice treaty unless the demand was met.
Although the leaders do not explicitly mention regional authorities such as Germany's federal states and devolved authorities in Britain and Northern Ireland, these bodies are likely to take part in the discussions about Europe's constitutional future.
The declaration acknowledges the need "to improve and monitor the democratic legitimacy and transparency" of the European Union and its institutions, and identifies four areas to be addressed by the discussion process:
How to establish and monitor a more precise delimitation of competences between the European Union and the member-states, reflecting the principle of subsidiarity;
The status of the Charter of Fundamental Rights proclaimed in Nice, according to the Cologne conclusions;
A simplification of the treaties with a view to making them clearer and better understood without changing their meaning;
The role of national parliaments in the European architecture.
The declaration states that the 2004 inter-governmental conference should not constitute an obstacle or precondition to the enlargement of the Union. Candidate countries that have concluded accession negotiations with the EU will be invited to take part in the summit and other candidates will be allowed to attend as observers.
The declaration omitted a call to "address the further development of European integration", a phrase in an earlier draft by Germany and Italy that caused outrage in Britain, where it was interpreted as a call for more power for Brussels.
The debate over the future constitutional shape of the EU was launched earlier this year by the German Foreign Minister, Mr Joschka Fischer, in a speech at Berlin's Humboldt University.
The foreign minister outlined a vision of a federal Europe with an elected president, a written constitution and a clear definition of the powers enjoyed by Brussels, the member-states and regional authorities.
A proposal made by Mr Fischer for a second chamber for the European Parliament, to be occupied by representatives from national parliaments, has won the support of Mr Blair, among others.
Those member-states that are enthusiastic about European integration view the definition of competences between the EU and member-states as an important step towards a federal structure.
Less integrationist states, such as Britain and Denmark, welcome the 2004 inter-governmental conference as an opportunity to set a final limit to the power of the EU and to protect the position of the nation-state as the primary repository of democratic legitimacy.