The measures go well beyond sanctions imposed by the United Nations last month and mirror steps taken by the United States in recent weeks to apply extra pressure on Tehran to return to negotiations over its uranium enrichment program.
As well as adopting harsher sanctions, including targeting Iranian banks and insurance companies, the foreign ministers called on Iran to resume talks over its enrichment work, which Western powers see as a veiled quest to develop nuclear weapons.
"This is increased pressure on Iran to enter into negotiations about their whole nuclear program," British Foreign Secretary William Hague told reporters as he arrived for the meeting in Brussels and before the measures were approved.
"I hope Iran takes from this message that European nations are open to negotiations about the nuclear program, but if they don't respond, we will intensify the pressure."
The extra sanctions, which also limit dealings with Iran's state shipping company and air cargo transporters, will not legally come into force until they are published in the European Union's official journal on Tuesday, diplomats said.
"The annex is extremely detailed and sets out precisely which Iranian entities — banks, insurance companies, shipping and cargo lines — are blocked," one diplomat said. "Once it's published, there is a legal obligation to comply."
Perhaps the hardest-hitting element of the sanctions is the move to prohibit new investment in and technical assistance to Iran's refining, liquefaction and liquefied natural gas sectors, which are a mainstay of Iran's energy-based economy.
Iran denies it is enriching uranium to fuel atomic bombs, saying the program is for energy and medical purposes only.
The broadened sanctions are intended to put strong financial heat on Iran, which is the world's fifth largest crude oil exporter but has little refining capability and depends on gasoline imports for domestic consumption.
Diplomats have also acknowledged, however, that the impact of the sanctions will depend on steps to ensure compliance.
Traders said this month Iran was depending more on friendly countries for fuel supplies to sidestep sanctions intended to hinder its fuel imports, and was buying about half of its July gasoline imports from Turkey and the rest from Chinese sellers.
But analysts said that while countries such as China, Turkey and Malaysia might step in to furnish Iran with goods it would now not be able to get from the European Union, the EU's sanctions were still well-enough designed to be effective.
"Most of the sectors that have been targeted in the EU sanctions are ones over which Europeans have a substantial leverage," Mark Fitzpatrick, an Iran specialist at the International Institute for Strategic Studies, told Reuters.
"Not so many other countries can provide the kind of financial services that will be cut off. Few other countries supply technology for liquified natural gas, nobody else does re-insurance...The European Union has very wisely found areas over which it has real leverage and cannot be supplanted."
As part of its "dual-track" approach twinning sanctions and diplomacy, however, the EU is also hoping that Iran will agree to resume long-moribund negotiations in the coming weeks.
The EU foreign affairs chief, Catherine Ashton, and Iran's chief nuclear negotiator, Saeed Jalili, have exchanged letters in the last few weeksa and it looks possible that they will meet for talks as early as September, diplomats say.
But Iran experts caution that any resumption of talks — the first negotiations with the West since October 2009 — are unlikely to produce quick results, rather more likely to begin a lengthy process of Iran manoeuvring to get sanctions lifted and the West seeking a moratorium on its uranium enrichment.
The Islamic Republic has said that it has an inalienable right to its own nuclear development for peaceful purposes without restrictions and this will not be negotiable.
