The marathon, at times rowdy voting session lasted more than two hours with some 500 amendments under consideration.

Known as the ?Bolkestein directive? after former EU Internal Market Commissioner Frits Bolkestein, the bill sparked bitter opposition among trade unions and the left, and was partly blamed for the ?No? vote in France?s referendum on the EU constitution last year.

The controversy has pitted free market crusaders such as Britain and the new east European member states against social protectionists in countries such as France, Germany and Austria, where voters fear the proverbial ?Polish plumber?, a symbol of migrants prepared to work longer hours for lower pay.

Bolkestein?s successor, Charlie McCreevy, called the parliament vote ?a real advance, a step that no one would have believed possible just 12 months ago?.

The EU executive says opening up services could generate 600,000 jobs and boost the bloc?s economy by between 1 percent and 3 percent, yet the main business lobby, UNICE, said the amended version would lose most of that benefit. ?The conditions will not be created to do that,? said Philippe de Buck, UNICE?s secretary-general.

But British conservative lawmaker Malcolm Harbour, who helped steer the bill through parliament, said the 25 EU member states would have to scrap a raft of restrictive measures that block small business from moving into foreign markets.

After a compromise last week between the main parties to exclude public services as well as temporary work agencies, gambling and social services, the key remaining battle centred on ?services of general economic interest? such as water, sewage and waste management.

Parliament voted to include these services in the scope of the liberalisation, although they will be subject to all national laws. Free marketeers won another small battle when the assembly voted to include private, although not public, health services in the scope of the bill, despite socialist opposition.

Cconservative deputies from Poland and other new member states voted against the bill or abstained saying it left too many loopholes that could be used to exclude central and east European companies. The compromise allows member states to bar any service provider, provided such intervention is non-discriminatory and proportionate.

At least 30,000 trade unionists demonstrated against the bill outside the parliament on Tuesday. EU governments and the European Parliament will have the final say on the legislation once the Commission has reworked its proposal in the light of yesterday?s vote.

<B> Huw JONES</B>