MEPs voted 484 to 109, with 12 abstentions, in favour of the Terrorist Finance Tracking Program (TFTP) deal, which will run for at least five years when it comes into effect on 1 August.

MEPs rejected the agreement in its previous form four months ago over privacy concerns but since then claim to have negotiated safeguards for European citizens.

The Parliament says it has secured an undertaking that the EU will start work in the second half of this year on a European data processing system that precludes the need to transfer data in bulk to the US.

The deal also provides a role for Europol in verifying that US requests are justified and ensures there is an EU representative in the USA to monitor data processing.

Alexander Alvaro, the MEP who drafted the recommendation, says: "In February Parliament sent a very clear message. We made it known that the Lisbon Treaty has given us more opportunities and more responsibility. During the negotiations, Parliament was able to make sure that improvements were incorporated into the agreement."

The vote has been welcomed in the US, with President Obama saying in a statement: "The threat of terrorism faced by the United States and the European Union continues and, with this agreement, all of our citizens will be safer."

Concludes the statement: "We are determined to protect citizens of all nations while also upholding fundamental rights, using every legitimate tool available to combat terrorism that is consistent with our laws and principles."

Lázaro Campos, CEO, Swift, says: "Protection of our customer data remains Swift's top priority. Over and above the new controls for public authorities envisaged under the agreement, Swift will continue to maintain its own long-standing state-of-the-art protections.