European leaders have agreed a new package of anti-crisis measures at a two-day summit.
However, they have been forced to delay increasing their rescue fund and acknowledged they faced new threats from a government collapse in Portugal.
The EU is battling to stem a debt crisis that has raged for over a year and led Ireland and Greece to accept bailouts.
It had promised to unveil a comprehensive solution at this summit that it hoped would reassure jittery markets.
But the abrupt resignation of Portuguese Prime Minister Jose Socrates on the eve of the meeting, after his austerity measures were rejected by parliament, cast a long shadow.
Uncertainty in other euro members such as Finland also prevented leaders finalising fundamental elements of their plan.
'The euro has survived a critical test but there is lots of homework to be done,' German Chancellor Angela Merkel told reporters, saying the union needed to 'atone for past sins'.
She added: 'This is a comprehensive package which I think is a big step forward. Whether it will be sufficient, only time will tell.'
Yields on Portugal's ten-year benchmark bonds pushed above 8% to a new record today, a rate seen as unsustainable for a country that needs to refinance about €4.5bn of debt in April and a similar amount in June.
Leaders were able to seal a deal on funding for the European Stability Mechanism (ESM) a new, permanent safety net that will become operational from mid-2013.
Ms Merkel backtracked before the summit on a deal that would have forced Germany, Europe's biggest economy and paymaster, to put up €11bn for the fund in its first year, reducing her wiggle room for tax cuts before the next election.
Under the compromise, capital injections totalling €80bn for all euro zone members will be spread out over five years rather than three, with smaller instalments.
Although leaders had agreed in principle earlier this month to boost the lending capacity of their temporary safety net - the European Financial Stability Facility (EFSF) - to €440bn from roughly €250bn, they had to push this back until mid-year because of looming elections in Finland.
Euro zone leaders also formally backed the 'Euro Plus Pact', a list of areas for expanded economic policy harmonisation, which has been renamed three times because of sensitivities in various individual member states.
Kenny again signals wait for bank tests
Taoiseach Enda Kenny has said that once the results of the bank stress tests were known next Thursday then the question of whether or not losses should be imposed on senior bondholders should become clearer.
When asked if he would rule out the question of losses being imposed on senior bondholders Mr Kenny said he had always argued that there were different categories of bondholders.
He said no more money should be committed till the extent of the liability was known.
At the end of a two-day summit Mr Kenny said he had reached agreement that the implications of Ireland's stress tests would be dealt with at ministers of finance level.
When asked if the Government was shifting the emphasis away from the question of a reduction in the interest rate and on to the question of the banking sector, Mr Kenny said the package needs to be adjusted both in terms of the interest rate and the banking system.
He said ECB agreement was critical to securing medium to long term funding for the Irish banking sector and that would give a greater degree of credibility to the markets.
He added that the ECB had now accepted that it was not prudent to have a firesale of banking assets as part of the EU-IMF programme.
Governor of the Central Bank Patrick Honohan and the Chief Executives of the country's main banks met in Dublin to discuss the stress tests.
