The decision marked the first time that the EU's 27 member countries had agreed to sanction violent Israeli settlers, following in the footsteps of the United States and Britain.
"A solid compromise has been agreed at the working level and I hope that this will be continued until full adoption soon, but the political agreement is there," EU foreign policy chief Josep Borrell told reporters after the ministers met in Brussels.
While much international attention has focused on Hamas' cross-border assault from Gaza and Israel's subsequent war there, European officials have also expressed increasing concern about rising violence against Palestinians in the West Bank.
The EU created a sanctions regime specifically to target Hamas following the attack on Israel by Hamas on Oct. 7.
It will impose the additional Hamas sanctions before sanctioning the Israeli settlers, diplomats said.
That sequencing was important for EU members close to Israel, such as Germany, Austria and the Czech Republic, which wanted to make clear they were not equating the two groups.
Hungary had put up the strongest resistance to sanctions on violent settlers, but recently changed its stance, diplomats said.
Borrell said countries that had previously blocked the proposal had now decided to abstain and the list of those who would face sanctions now needed to be rubber-stamped. They face travel bans and asset freezes.
The struggle over the proposed sanctions reflects broader divisions on the Middle East, with some EU countries strongly backing Israel while others lean more towards the Palestinians.
(Reporting by Andrew Gray and John Irish and Sudip Kar-Gupta; Editing by Toby Chopra and Mark Potter)
