The European Union will update its freedom of movement rules to allow member states to reintroduce border controls as a last resort for security reasons.
The European Commission announced the move on Wednesday following a spate of terror attacks across member states including France, Germany and Spain.
It said the temporary update will apply for three years and is in response to the need to fight against "persistent serious threats to public policy or internal security."
Border controls will remain an "exception" or "measure of last resort" for travellers.
First vice-president Frans Timmermans said: "The Schengen Border Code rules for reintroducing internal border controls were devised in a different time, with different challenges."
"The exceptional circumstances that we see now, such as the increased terrorist threat, have led us to propose a Schengen Border Code more fit for purpose in this new day and age," Mr Timmermans said.
He said member states should be allowed to act when "confronted with serious threats to their public policy or internal security."
"At the same time, they should act only under strict conditions. This is how we secure free movement and promote security within Schengen."
The Schengen area refers to 26 European countries that 400 million people can easily travel between - leading to more than 1.25 billion journeys between countries each year.
The changes mean that countries will be able to reintroduce frontier checks for six months for security reasons, and two years if that is combined with a threat to borders such as Europe's migration crisis.
EU Commissioner for Migration, Home Affairs and Citizenship Dimitris Avramopoulos said the Schengen agreement is a major achievement and Europe is committed to preserving it.
"But in a common area without border controls, security concerns are common too," Mr Avramopoulos said.
"This is why we must do everything to preserve the careful balance between free movement and mobility on the one hand, and security on the other."
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