The directive aims to protect citizens' rights to data protection when their data is used by law enforcement authorities, while cutting red tape for those authorities because they will no longer have to apply different rules to data from different member states, the Commission said.
Clear principles and rules apply to both domestic and cross-border use of data and would make international cooperation easier, it said.
Commissioner for justice, consumers and gender equality Věra Jourová said: "The right to personal data protection is a fundamental right in the EU. Victims and witnesses, but also suspects of crimes have the right to have their data duly protected in the context of a criminal investigation or a law enforcement action. The common rules and principles we have proposed will ensure that. At the same time more harmonised laws will also make it easier for police or prosecutors to work together in cross-border investigations and to combat crime and terrorism more effectively across Europe."
The European Commission proposed a comprehensive reform of data protection rules in 2012.
The Justice Council agreed in June with the European Commission's proposal on data protection regulation, which aims to create harmonised data protection rules and to be a step towards an EU digital single market.
Today's agreement means the EU is on track to finalise its data protection reform by the end of this year, the Commission said.
'Trilogue' discussions between the Commission, the European Parliament and the Council of the EU on the Directive will begin later this month.