European Union finance ministers have agreed a deal on new rules that will force investors and wealthy savers to share the costs of future bank failures.

The agreement was reached in the early hours of this morning following a seven-hour meeting chaired by Minister for Finance Michael Noonan.

The plan stipulates that shareholders, bondholders and depositors with more than €100,000 should share the burden of saving a bank, with a taxpayer-funded bailout now being a limited last resort possibility.

Minister Noonan said the agreement "marks a revolutionary change in the way banks are treated".

The minister said it is "a major milestone in our effort to break the vicious link between the banks and the sovereigns".

He added that governments will no longer have to save banks that were too big to fail and that "bail-in is now the rule", putting an end to moral hazard by making it clear that banks will suffer before the government steps in to help, if it does at all.

EU governments will now start negotiating the legislation with the European Parliament.

Dutch Finance Minister Jeroen Dijsselbloem said: "If a bank gets in trouble we will now throughout Europe have one set of rules on who pays the bill.

"The financial sector itself will now to a very, very large extent become responsible for dealing with its own problems."

German Finance Minister Wolfgang Schaeuble said the agreement "is an important step" toward completing a banking union.