Croatia has taken a step closer to joining the Schengen zone
The bloc's newest member will be gradually integrated into the Schengen Information System (SIS), a new computer intelligence network designed to crack down on illegal immigration and cross-border crime.
The European Commission said the move would help "increase the security of European citizens" and shows Brussels is still backing Schengen despite a series of political setbacks.
But any move to make Croatia a full member of the borderless zone is likely to meet with stiff resistance from western European countries which fear a spike in organised crime would follow.
The tiny eastern European state is also on the frontline of the ongoing migrant crisis and forms a key part of the Balkan route which refugees take north from Greece towards Germany.
The eastern European country has struggled to cope with the migrant influx
Schengen has been temporarily suspended in some countries because of the terror threat
Schengen, which is seen by europhiles as one of the bloc's crowning achievements, has been suspended in seven countries due to the ongoing terror threat to Europe.
It has faced a political hammering over a number of atrocities, including the November 2015 Paris massacre, in which jihadis exploited weaknesses in the open borders system.
Brussels recently agreed to extend France's reintroduction of border controls until at least July this year, citing the "permanent terrorist threat" facing the country.
And some commentators have speculated that Schengen is effectively finished because the political climate in Europe has started to turn against totally unrestricted movement of people.
Announcing the move to bring Croatia closet to membership of the zone, the EU Commission said: “This is another important step in enhancing effective information exchange between member states and increasing the security of European citizens.
“It will allow for closer cooperation between Croatia and both the other EU member states as well as the Schengen Associated Countries in finding persons who are sought in relation to criminal activities, missing persons and certain objects such as stolen vehicles and documents”.
The European Council, which is made up of the leaders of the 28 member states, will now have to ratify the proposal to bring the EU's youngest member further into the fold.
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Schengen, which was set up in 1995, abolished all border checks at the EU's internal borders and encompasses all member states except for Britain, Bulgaria, Cyprus, Ireland and Romania.
Bulgaria and Romania are desperate to join the zone but have been blocked from doing so by the Netherlands, France and Germany which have raised fears over security and crime.
The two nations also both have external borders to the bloc – Romania with Moldova and Ukraine and Bulgaria with Turkey – and concerns have been raised about their abilities to manage the flow of migrants arriving in Europe.