Under UEFA president Michel Platini's "Financial Fair Play" plan, clubs will not be able to spend more than they generate through revenues while cash injections from rich benefactors will be severely restricted.
Those who fail to comply could ultimately be barred from entering European competition.
"The new financial fair play regulations were finally approved unanimously," UEFA general secretary Gianni Infantino told reporters after an executive committee meeting.
"The main rule is the break-even requirement which will be phased in over the next three years.
"It is not as easy to swallow for everyone but everyone understands it is necessary.
"They are there not to punish clubs, they are there to help clubs. We don't want to kill anyone, this is why we have a phased-in approach."
If successful, the plan - which does not apply to domestic leagues and was approved in principle last September - could have a huge impact on European club football as it will effectively force clubs to slash salaries and transfer fees to keep their expenditure within limits.
The rules are also aimed at ending the trend of rich owners buying into the game and transforming the fortunes of a club, as happened with Chelsea and more recently Manchester City in the English Premier League.
ALLOWED LEEWAY
This has a knock-on effect as other clubs stretch their finances in order to try and keep up.
Clubs will be allowed some leeway as money invested in stadiums and youth development will not count when auditing their accounts, UEFA said.
"Clubs could spend an unlimited an amount of money on those things but when it comes to salaries and transfer fees they have to manage their cost structure in a much more prudent way," said Andrea Traverso, head of club licensing at UEFA.
Clubs will also be allowed to run up a deficit of 5 million euros over three seasons and may receive cash injections of 45 million euros for the period comprising the 2013/14 and 2014/15 seasons together. This will be reduced to 30 million euros for the period covering 2015/16, 2016/17 and 2017/18.
However, they will not be permitted to owe any money to other clubs, employees or tax and social service authorities at the end of the season.
Earlier this year, Infantino said 50 percent of European clubs were running at a loss with 20 percent showing serious deficits.
He said clubs could still spend large amounts on transfer fees if they had enough revenue.
"If clubs want to spend 50, 60 or 70 million (euros), why not, provided they have the money coming from their revenues, this will continue in the future," he said.
"The problem is when you don't have the money."
The European Clubs' Association (ECA) said it welcomed the plan.
"This is really a huge achievement," ECA president Karl-Heinz Rummenigge said in a statement. "The measures will shape
