The European Parliament has passed a vote which means all new cars will be fitted with an emergency alert system from next year.
The eCall system will transmit the location of a car to the nearest emergency response centre and make a 112 call in the case of a serious accident. It is hoped the system could save thousands of lives across the continent every year.
The draft legislation means that from October 2015, all new models of passenger cars and light duty vehicles would be fitted with eCall.
European Commission Vice-President Siim Kallas, who is responsible for transport, described the proposals as "a milestone"
"Last year, 28 000 persons were killed and 1.5 million were injured on EU roads. When an accident happens, every minute counts to rescue injured victims" he said.
"The eCall technology has great potential to save lives in shortening dramatically the time of intervention of emergency services and this across the EU" he added.
Sensors in the vehicle will contact emergency services
Estimates suggest that eCall could speed up emergency response times by 40% in urban areas and 50% in the countryside, and save up to 2,500 lives a year.
The system is activated automatically as soon as in-vehicle sensors detect a serious crash. Once set off, the system dials the European emergency number 112, establishes a telephone link to an appropriate emergency call centre and sends details of the accident to the rescue services.
This will include the time of incident, the accurate position of the crashed vehicle and the direction of travel. The eCall can also be triggered manually by pushing a button in the car, for example by a witness to a serious accident.
This follows similar legislation in the US, where the government there is to begin taking steps to introduce cars that 'talk' to each other on the roads.