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EU ministers in Brussels have today approved an agreement with the US to change transatlantic air travel to allow greater competition.

Under the new guidelines any EU-based airline would be able to fly from any EU city to any US city and vice versa.

It is expected to radically transform the nature of travel and drive down the price of tickets.

"The deal is of great political and economic importance," EU transport commissioner Jacques Barrot said.

"The fact that everyone in the council [of transport ministers] has been able to welcome the outcome is to be commended."

At the request of Britain the 27 ministers sought a five-month delay in implementing the deal so that it will take effect from March 2008 rather than October this year.

Britain's concerns included the restrictions placed upon European carriers operating domestic flights in the US.

London's busy Heathrow airport, currently served by only four carriers, is likely to be affected by the changes, sparking fears among British Airways officials that the airline may lose its strong footing in the airport.

But Mary Peters, US secretary of transportation, described today's decision as "historic".

"It will bring new and valuable benefits to air travellers and communities on both sides of the Atlantic," she said in a statement.

"Tearing down regulatory barriers allows us to foster more affordable and convenient air travel and gives our airline industry more opportunities to compete, innovate and thrive."

Jack Dromey, deputy general secretary of the Transport and General Workers Union, said that Britain's transport secretary Douglas Alexander had "made the best of a bad job".

"The proposed new arrangements should be scrapped if the Americans do not agree a second stage deal opening up their markets," he added.

And Jos Dings, director of the European Federation for Transport and the Environment (T&E), warned that the deal is a "serious setback" to EU climate policy.

T&E believes that increased aviation growth will completely offset reductions of carbon dioxide emissions.

"Just two weeks after the EU announced major new climate targets, it has given away airspace to American carriers but hasn't gained a clear mandate to combat emissions from those flights," said Mr Dings.

"The EU must ensure that no environmental measures are ruled out in the second round of open skies negotiations and that inclusion of aviation into the emissions trading system is used to maximum environmental effect."