Video | EU President explains decisions taken by leaders on eurozone

"Today we took important decisions to strengthen the euro," European Council President Herman Van Rompuy told reporters at a press conference after a meeting that lasted through the night Thursday and into the early morning hours.

"We have endorsed the final report of the task force [on economic governance] and we have also found an agreement about the procedure to decide upon a crisis mechanism for the Eurozone," he said.

Van Rompuy said he would consult with the member states to try and broker an agreement on "limited treaty change."

"We are not talking about a wholesale revision of the treaty," he said.

EU diplomats said a German proposal to suspend the EU voting rights of states that contravene the budget rules had failed to garner support.

The EU aims to beef up the enforcement of its debt and deficit rules, which require countries to limit their debts to 60% of their GDP and their annual budget deficits to 3% of GDP.

Under current regulations, countries that breach the rules have rarely faced penalties because the process of imposing them is so highly political. Some member states want to make the imposition of sanctions less political and more automatic, while others oppose that idea for fear of ceding too much power to Brussels.

Last week, a bilateral agreement between France and Germany watered down a plan by the European Commission that would have allowed for sanctions to be imposed quasi-automatically with far less say from politicians. Instead, they gave considerable discretion back to politicians.

That agreement, which is reflected in the economic governance report approved earlier today, was strongly criticized by the ECB and other European officials, including Eurogroup President Jean-Claude Juncker.

Leading the opposition to the watered down proposal is European Central Bank President Jean-Claude Trichet, who had refused to sign up to the report, produced earlier this month by Van Rompuy and a task force that included European finance ministers and Trichet himself.

Many other ECB Governing Council members have also said they would like to see more ambitious new rules with less risk of political interference and more automatic sanctions. Ultimately, however, the ECB is really only a bystander and has no statutory power to change the decision of the leaders.

"Some people claim to be disappointed there is not more "automaticity" in the decision-making," Van Rompuy said, adding that "more automaticity is exactly what we propose."

He said the EU finance ministers would now have to vote to lift the sanctions, on the basis of a reversed majority, "whereas until now a majority had to approve the sanctions."

But he said "the judgement of the finance ministers is foreseen in the Treaty and therefore cannot be eliminated."

The EU leaders are set to discuss the topic further at their next summit meeting in December, Van Rompuy said. So treaty changes could be approved by the middle of 2013 at the latest, ahead of the expiration of the temporary crisis mechanism set up in May this year.

The leaders will resume their talks at 0900 GMT Friday, when they focus on upcoming external meetings, including preparation for the next G20 meeting.

A draft of the summit's conclusions shows that the leaders are set to warn against competitive currency valuations and rising protectionism, as Market News International reported on Thursday.