The European Parliament has asked the EU executive to immediately stop what it describes as an illegal transfer of airline passenger data to the United States, giving it two months to solve the issue or face action in Europe's top court.
Washington has demanded that foreign airlines hand over details of travellers to the US so that it can more easily detect potential terrorists before they enter the country.
Faced with the threat of US fines, most airlines are passing on information such as the address, telephone and credit card numbers of a passenger to Washington even though this is in breach of EU privacy laws.
In February, the Irish Council for Civil Liberties said the agreement between the European Commission and the US eroded privacy rights enjoyed by EU citizens under data protection laws.
"Since March this year, European law as well as the principle of legality are being blatantly violated with the connivance of the European Commission," said Mr Marco Cappato, an Italian parliamentarian who supported the resolution today.
"Now it is up to the Commission...to choose: either they apply EU law before...two months from today, or they run the risk of being brought by the European Parliament to the European Court of Justice."
Under EU law personal data can be passed on only after citizens give their consent and should not be passed on to countries offering few privacy safeguards, which is the case of the US according to the EU.