The European Commission has unveiled an economic recovery plan worth 200bn euros (£170bn) which it hopes will save millions of European jobs, according to BBC.
The idea is to stimulate spending and boost consumer confidence by injecting more purchasing power into region.
Commission president Jose Manuel Barroso said the plan was "timely, temporary and targeted".
The EC expects member states to contribute 170bn euros while the European Union will give 30bn euros.
Mr Barroso said it was important that EU members acted together in a period of "exceptional crisis".
"It`s the best way to restore citizens` confidence and counter fears of a long and deep recession," he added.
The European Commission president said the bigger part of the package would be implemented in 2009, while some measures would continue into 2010.
The proposed plan will need to be approved at the next EU summit in December.
The BBC`s Europe Editor, Mark Mardell said that much of the Commission`s proposals looked a lot like British Chancellor Alistair Darling`s recent financial package.
"The Commission`s hope is that if others follow suit soon, it will have a big impact," he said.
The 27 member states need to decide whether to sign up to the plan.
"Measures that member states are introducing should not be identical, but they need to be coordinated," said Mr Barroso.
Mr Barroso said he had been in touch with member states about the package and a consensus was emerging.
"I expect this package to receive strong support", he said.
Earlier, Chancellor Merkel expressed concern about getting "into the race for billions" by unveiling huge stimulus packages.
"We should walk a measured path and keep to the middle ground, which is made-to-measure for the situation in Germany," she told the Bundestag, the lower house of parliament.
A number of member states, including Germany, France and Italy, have already announced their own measures designed to stimulate their economies, including multi-billion injections into key industries and tax cuts.
Mr Barroso said that the plans already unveiled by member states were part of the Commission`s recovery plan.
He said that not every country had to commit to the target of 1.2% of GDP.
"We have different points of departure. So we picked an average effort of 1.2%."
Earlier, France and Germany`s leaders called on the EU to ease its fiscal rules to allow nations to spend more to boost their economies.
The requirement to hold public deficits below 3% of GDP in individual EU countries should be eased, France`s Nicolas Sarkozy and Germany`s Angela Merkel said.
The two leaders made their comments in a joint newspaper article in France`s Le Figaro and Germany`s Frankfurter Allgemeine Zeitung, saying that governments had to head off a "recessionary spiral" at home.
But Mr Barroso said the Commission was not planning to revise EU budget rules.
"We are not going to introduce greater flexibility. The stability pact already has flexibility in it," he said.