The deal will be welcomed by millions of mobile phone owners as it means they can use their phone in another member country and pay the same rate for calls, text messages, and data usage as they would back home.
The agreement, announced by the European Council today, also states that telecoms operators will be required to treat the majority of internet traffic equally, meaning they cannot block or throttle certain online applications, content or services.
Before the roaming agreement comes into force, roaming charges will see another drop in April 2016. operators will only be able to charge an extra 0.05 ($0.06) per minute of call made, 0.02 ($0.02) per text message sent, and 0.05 per MB of data, excluding tax.
European Parliament ministers wanted roaming charges to be completely removed by 2016 but member countries resisted, saying they wanted a later implementation.
James Padmore, head of mobile at comparethemarket.com, said: "Finally, in the not too distant future, we'll be able to phone as we roam the continent. This is great news for holidaymakers and business people alike. For too long, we have been slaves to 'roam phobia' when on holiday, afraid to keep data roaming on in case we incur huge charges. As such, we have been unable to use our smartphones in the same way we do at home.
"From 2017, we'll be able to navigate our way through the streets of a bustling European town, look up what time the museum shuts or check to see what concerts are on in the area without that lingering worry that using the Internet is going to cost a fortune."