The European Commission on Thursday said it was earmarking 25 million euros (about US$280m) for a special "African peace facility" to fund African-led peace-keeping operations on the continent.
Fostering peace and security is essential if Africa is to break the vicious circle of poverty and war and failing socio-economic structures, said European Development Commissioner Poul Nielson.
Officials said money from the European Union would be used to fund transport and housing facilities for troops as well as for special allowances paid to soldiers on foreign assignment.
EU money will not be used for expenditure on arms, ammunitions or salaries of troops.
A request for EU assistance to help African countries deal with conflicts was made by African leaders in July this year.
The EU sent a peace-monitoring mission to Bunia in Congo in August but officials said the new funding initiative focused on peace operations led by African themselves.
The new facility will also provide a more stable mechanism for EU contributions to such missions in the future, they added.
EU money would give the African Union financial muscle to back up its political resolve to deal with conflict with concrete actions, the Commission said.
Financing for the facility will come from the long-standing European Development Fund, traditionally used to finance development projects in African, Caribbean and Pacific (ACP)) countries.
About 1.5% of EU funding foreseen for national ACP aid programmes will be shaved off to pay for part of the peace facility.
"School or roads cannot be built while countries are ravaged by conflicts," the Commission argued, adding that support to peace keeping must be seen as an integral part of fostering development.
Officials said they expected the facility to be operational early next year, following its approval by both EU and ACP governments.