From January 2012, all airlines operating in or out of the European Union will have to limit carbon dioxide emissions to 97 percent of 2005 levels. From 2013, that figure will dip to 95 percent.

"The main objective of the new law is to reduce the impact of aviation on climate change, given the rapid growth of this sector," a statement said, after EU interior ministers approved the deal.

Airlines are furious about the change which they say threatens their survival as they struggle with high fuel prices and have warned that it could spark trade wars with other countries.

"Crisis is not the time for rubber stamps. But that is exactly what the (EU) used today, without a word of debate," complained Giovanni Bisignani, director general of the International Aviation Transport Association (IATA), speaking in Istanbul.

The decision will "seal into law the 3.5 billion euro (4.5 billion dollar) cost of bringing airlines into the European Emissions Trading Scheme. It's Brussels acting in a bubble, even in the middle of a global economic crisis," he continued.

The IATA released gloomy figures for air traffic in September, with the high oil prices exacerbated by a drop in demand fuelled by the economic crisis.

The plans have also sounded alarm bells in Washington which has raised the prospect of launching litigation if Europe goes ahead with them.

"It is an international, multilateral issue," one American official told AFP.

"Doing something bilaterally or unilaterally on that issue could have unintended consequences for people who aren't in the room. So we think it needs to be discussed in a broader venue and resolved that way."

The EU statement said the deal for aviation in Europe "is only a first step towards (the) final goal of a global sectoral agreement concerning the reduction of greenhouse gas emissions from aviation".

According to the plans, airlines will have to meet the pollution targets either by reducing their emissions or by buying carbon dioxide credits from other industries with surpluses.

Additionally, airlines will have to buy 15 percent of their emissions allowances through auctions, although they will receive the rest for free.

However given the problems being experienced by the sector, amid historically high oil prices in past months and with consumers suffering from the credit crunch, some exemptions and concessions were agreed in the measure.

New entrants, or fast-growing operators in the airline sector will have a three-percent leeway in emissions.

Operators with "low traffic levels" will also be excluded from the scheme "in order to avoid disproportionate operating costs." This clause was included in part to aid airlines in developing countries.

The new measures also exclude emergency services, such as search-and-rescue aircraft, fire-fighting and humanitarian aid flights as well as police, customs and military operations.

Member states have 12 months to bring their national laws into line with the new EU rules, which are already a compromise between the European Parliament and the bloc's 27 nations.

The aviation emissions system is part of a broader European Union scheme to cut greenhouse gas emissions by 20 percent by 2020, from 1990 levels.

Currently aircraft produce three percent of all European greenhouse gas emissions, although the European Commission has said that rate could double by 2020.

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