In March next year all PCs will be sent a software update that will cause a window to appear on screen offering them options to the pre-installed Microsoft Explorer.
All new PCs will also offer a selection of browser options including Mozilla’s Firefox and Google’s Chrome.
Following the deal the EU today dropped anti-trust charges against Microsoft.
The move ends a decade of action by regulators as a result of alleged anti-competitive practices by the company.
Under the terms of the deal, Microsoft will give users a choice of up to 12 other web browsers when they are using computers running on Windows, the operating system which runs the vast majority of the world’s computers.
Consumers will still be given the option to keep Internet Explorer if they want
Computer manufacturers will also be able to produce PCs without Internet Explorer in Europe.
“Millions of European consumers will benefit from this decision by having a free choice about which web browser they use," said EU Competition Commissioner Neelie Kroes.
“Such choice will not only serve to improve people’s experience of the internet now but also act as an incentive for web browser companies to innovate and offer people better browsers in the future".
The ballot screen will list the 12 most popular Web browsers running on Windows, with five featured prominently.
Users will be able to choose Apple's Safari, Google’s Chrome, Microsoft's Internet Explorer, Mozilla's Firefox, Opera, AOL, Maxthon, K-Meleon, Flock, Avant Browser, Sleipnir and Slim Browser.
The EU said around 100 million computers will display the screen by the middle of March, and around 30 million new computers will show it over the next five years. The choice of browsers will be updated every six months and those offered may change according to how popular they are at the time.
Regulators have warned that the company may still be fined up to 10 per cent of its yearly global turnover if Microsoft does not stick to the terms of the deal over the next five years.
Microsoft has already paid around $1.7 billion (£1 billion) in fines from previous enquiries into the company's business practices.
In January, the EU charged Microsoft with monopoly abuse for tying its browser, Internet Explorer to the Windows operating system software used on most desktop computers — this, they said, was an "artificial distribution advantage".
Earlier this week, the EU said that a ballot screen would eliminate these concerns when it is downloaded as an automatic update to all users of Windows XP, Windows Vista and Windows 7 in Europe who have Internet Explorer set as their default browser.