The Commission decided that subsidies pumped into the Gdynia and Szczecin sites were "illegal" because they did not aim to secure their existence, rather give them an "unfair" advantage over private competitors.
Under the agreement found with the Polish government, Warsaw will first sell the shipyard's assets to recoup the money and then sell off the yards themselves.
Competition Commissioner Neelie Kroes said this decision was the most difficult she had ever had to present the EU executive. But she said she was "confident" that this solution would secure "viable economic activity" at the sites in the future.
Both shipyards were the centre of the country's struggle against Communism in the 1980s, so Poland has an emotional and historical link to the sites.
Kroes praised the "positive cooperation" of the Polish government, which agreed to sell off the yards by open tender by the end of May 2009, according to a Commission statement.
Polish Treasury Minister Aleksander Grad described the compromise as "good for Poland and good for the shipyards". He added: "It allows us to go ahead with privatisation calmly," he told reporters in Warsaw.
Gdynia and Szczecin employ a total of around 4,500 people, but the Polish government noted that up to 60,000 jobs could be threatened by the latest developments, which are expected to hit related supply and service sectors too.
Polish unions expressed concern over the employees' fate and fear "the end of the shipbuilding industry in Poland". Potential new owners would not be obliged to continue building ships or to retain the thousands of workers employed there.
Kroes pledged that the EU would help those laid off through programmes such as the European Globalisation Adjustment Fund.
Meanwhile, the Commission has not yet made a decision on the nearby Gdansk shipyard, which received fewer state subsidies and has already been privatised. Kroes advised the Polish government to present a restructuring plan for the site, which was the birthplace of the Solidarity movement that helped to overthrow the Communist government in 1989.
