It will be the first time that the European Union directly funds the making of items, such as artillery.
The European Parliament on Thursday backed the use of as much as €500 million from the EU budget to finance the bloc's industrial production capacities for ammunition, such as ground-to-ground missiles and artillery.
The regulation, known as the Act in Support of Ammunition Production (ASAP), was proposed by the European Commission in May, but was fast-tracked through the EU legislative process, with almost all the political groups voting in favour of it.
"We should not refrain from defensive capabilities support like the one that we are giving with this regulation, to ensure that Ukraine would not run out of the ammunition they need to defend from the aggression," Brando Benifei, an Italian socialist MEP told Euronews.
Ville Niinistö, a European lawmaker from Finland said in an interview that there is a specifically inserted paragraph "making sure that these extra resources with the increases of ammunition production are meant for Ukraine".
"And then secondly, to then also supply our own storages that have been depleted by supporting Ukraine," he added.
It is the first time that the EU directly finances weapons production. But not every MEP is happy about it, particularly on the Left.
"This means that we now have a situation in which the European Union funds not just research and development for arms, but not just by arms, but is also going to fund directly the production of weapons from companies that are making excessive profits already," Marc Botenga MEP told Euronews.
"The war in Ukraine for weapons companies has been a blessing, you know, so they're making excess profits and we're going to basically subsidise their production. It's a big mistake."
The money for the European military industry will come from two EU defence funds, but national governments can also top this up by amending their pandemic Recovery and Resilience Plans.
The bill's final adoption by member states will likely happen before the summer break.