EU environment ministers backed the rules on Monday (29 October), in a final stage of the process before official publication of the law.
From 2015, the maximum sulphur content of shipping fuels will be cut by 90% to 0.1% in restricted Sulphur Emission Control Areas, which include some of Europe's busiest waters, versus 1% of mass now.
Outside the controlled areas, an International Maritime Organization limit of 0.5% will be mandatory in EU waters by 2020. That compares with the current 3.5% for cargo vessels and 1.5% for passenger ships.
Shipping fuels with a high sulphur content lead to emissions of sulphur dioxide and particulate matter. The sulphur dioxide causes health problems and acid rain. The microscopic particles can lead to life-threatening health-problems such as lung cancer and cardiovascular disease, European environment officials have said.
The European Commission has said it plans to review air quality laws next year to bring EU limits on pollution levels closer to the stricter World Health Organization (WHO) recommendations on safe levels of pollutants.
While many pollutants are a relentless problem, EU rules have already reduced sulphur dioxide emissions.
Environmental campaigners say the new legislation is progress, but more is needed.
"Today's council decision on sulphur dioxide in marine fuels is an encouraging first step to clean up shipping emissions to air that cause 50,000 premature deaths every year in Europe," said Antoine Kedzierski, shipping specialist at Transport and Environment campaign group.