Parliament yesterday voted 522 to 128 in favour of the compromise proposals, which would allow companies to produce vodka derived from raw materials other than potatoes or cereals to keep the name as long as these ingredients were listed on the label.
Under the proposed law EU vodka producers can continue to manufacture their products as long as they follow the new labelling rules.
The industry was concerned than any new EU law would mean restrictions on how some of their current products could sold as vodka.
The talks have long divided manufacturers in the bloc over just what ingredients should be allowed in vodka.
Poland, along with Sweden, Finland, Germany and the Baltic states claim that true vodka can only be made from potatoes or cereals.
This stance is opposed by producers in countries like the UK, Ireland and Hungary, which say fruit and other ingredients can be added during vodka distillation without changing the taste.
They add that the tighter rules would also have hampered innovation in the sector - such as vodka made from grapes.
Despite these differences in opinion, the decision yesterday seemed to be met with universal -- albeit cautious -- praise from both sides.
Despite voting against the proposals in Parliament, Finnish legislator Alexander Stubb told BeverageDaily.com that the decision in the long run was a "victory for vodka" .
"I wanted the restrictions to be tighter, so that vodka was defined strictly like gin and whisky," he said.
However, Stubb conceded that the vote's outcome now ensures that the EU finally has a definition for vodka, where none has been in place originally.
"The glass is half full," he said.
About 70 per cent of the bloc's vodka comes form the so-called "vodka-belt", which includes nations like Finland and Sweden.
There still remains the chance that the decision could yet be overturned, with the EU's Council of Ministers due to consider and vote on the proposals later this year.
Stubb expects the current proposals to be finalised though, and believes the World Trade Organisation would not wish to open up another argument on the definition, which could be extended to other spirits.
Despite his own mixed opinions over the vote, Chris Scott Wilson of the European Vodka Alliance (EVA) was much more optimistic about the outcome.
He called for a swift implementation of the new proposals.
"The EVA has supported this compromise from the start," he stated.
"We hope now that the Council of Ministers will endorse the Parliament's opinion and that this issue can be resolved once and for all."
The EVA has long opposed calls for a stricter definition of vodka, claiming that vodka belt producers have " no unique heritage that would found a claim to determine the definition of the generic vodka category ".