LISBON - European Union leaders signed the Treaty of Lisbon on Thursday to reform the bloc's institutions and give it stronger leadership, marking the end of a difficult process that has lasted nearly a decade.

At an elaborate signing ceremony at Lisbon's grandiose Jeronimos Monastery, leaders said the treaty would open a new chapter in EU history by giving it a more robust foreign policy and more democracy in decision-making.

The treaty replaces an ambitious constitution that was scrapped after French and Dutch voters rejected it in 2005.

"This was the European project that many generations dreamt of and others before us championed, with a vision of the future," Portuguese Prime Minister Jose Socrates said at the ceremony.

"Europe was blocked, without knowing how to move forward and we found the solution with this treaty," French President Nicolas Sarkozy told reporters.

The treaty is a toned down version of the constitution and EU leaders hope it will be effective in adapting the bloc's structures to having 27 members, after it opened its doors to 12 mostly ex-communist states in 2004 and 2007.

"For the first time, the countries that were once divided by a totalitarian curtain, are now united in support of a common treaty that they had themselves negotiated," European Commission President Jose Manuel Barroso told the leaders.

"It is the treaty of an enlarged Europe from the Mediterranean to the Baltic, from the Atlantic Ocean to the Black Sea," he said.

LONG-TERM PRESIDENT

The bloc's rotating presidencies will end with the new treaty and be replaced in 2009 with a long-term president of the European Council, who will chair summits. The treaty will also create a foreign policy high representative.

It will allow more decisions to be taken by majority voting, notably on justice and security issues, and give more say to the European and national parliaments. A charter of fundamental European rights is attached to the treaty.

The leaders signed the treaty in the monastery's cloister, taking turns to sign under the hall's elaborate arches while Beethoven's Ode to Joy was played in the background.

Afterwards, the leaders hopped on a tram with the words 'Treaty of Lisbon' written on its side to travel the short distance to lunch at a nearby museum.

The signing will start a ratification process by national EU parliaments that leaders hope will avoid the 2005 "No" by French and Dutch voters to the proposed constitution.

This time around, only Ireland is planning a referendum, reducing the risks of an upset, even though polls suggest many Irish voters are undecided or indifferent.

Portuguese Foreign Minister Luis Amado warned in an interview on Thursday that failure to ratify the treaty would create fresh turmoil in Europe.

"We would have a political crisis in Europe, a serious one, worse than the one we've already been through," Amado told the Spanish daily ABC.

In streamlining decision-making and ending a drawn-out process, officials hope the treaty can allow the EU to turn to more important things, such as job creation and the challenges of globalisation.

Prime Minister Gordon Brown signed the treaty later at the restaurant where the leaders had lunch after delaying his arrival due to an appearance before a parliamentary committee.

Brown's Foreign Secretary David Miliband said: "This is a day for Europe to look to the future."