Mobile phone operators have to offer users a capped rate for calls made or received abroad by the end of this month, as the EU's 27 governments have given the final thumbs up to a law that will slash the costs of using a mobile phone abroad.

The EU law will cut roaming mobile phone costs by around 70 percent, the German government said today. In the first year, roaming tariffs will be capped at €0.49 (33p) a minute for making calls abroad and €0.24 for receiving them. It will fall to €0.46 and €0.22 in the second year, and €0.43 and €0.19 in the third, respectively.

Mobile phone operators have lobbied hard to avert the law, which they see as unnecessary and harmful to competition.

A rearguard action by UK Industry Minister Margaret Hodge in defence of mobile phone operators was thwarted. The UK government has been convinced to support the compromise package put forward by the European Parliament.

German Economy Minister Michael Glos was chairing the meeting because Germany currently holds the six-month rotating presidency of the EU.