European Union countries on Wednesday approved a fund worth 3 billion euros ($3.3 billion) for Turkey to aid mainly Syrian refugees in the country in exchange for Ankara ensuring to help stem the refugee flow after more than a million people reached the continent last year.
All 28 nations of the bloc signed the proposal at a meeting in Brussels after Italy stopped objecting to the plan, which was first approved in November.
Italy had objected to the plan saying there needed to be more certainty over how the fund was spent.
The bloc's executive European Commission welcomed the decision.
"Turkey now hosts one of the world's largest refugee communities and has committed to significantly reducing the numbers of migrants crossing into the EU," said Johannes Hahn, Commissioner for Neighbourhood Policy and Enlargement.
"The Facility for Refugees in Turkey will go straight to the refugees, providing them with education, health and food. The improvement of living conditions and the offering of a positive perspective will allow refugees to stay closer to their homes."
The EU would provide 1 billion euros from its own budget, the rest is to be provided by 28 governments, with Germany being the top contributor at 427.5 million euros ($473 million) in 2016.
The joint action plan also includes "accelerating the fulfilment of the visa liberalisation roadmap and re-energising the accession process with Turkey," the EU said in a press release.
Turkey is a transit point for refugees aiming to reach European countries from Syria and Iraq because of its geography bridging the Middle East and Europe.
The country hosts more than 2.5 million Syrian refugees, the most in the world according to registration records of the United Nations.
In January, Turkish Prime Minister Ahmet Davutoglu said that Turkey, as the most affected country by the refugee crisis, was not begging for money from the EU, but expected the international community to share the burden.
“Turkey has spent close to $10 billion on the refugees," Davutoglu said.
"There are many things to be done, together with the EU, together with the international community. But nobody can expect from Turkey to carry the entire burden alone," he stressed.
Refugees escaping the violence in their country fled Syria in large numbers following the escalation of the Syrian Civil War in 2012.