The report's authors celebrated it as a breakthrough in the fight against human trafficking and exploitation but critics call the approach "biased".
A report calling for common guidelines on prostitution for all EU states was approved at the European Parliament's plenary session in Strasbourg on Thursday.
There were 234 votes for, 175 votes against and 122 abstentions.
The report will now go to the European Commission which will draft a legislative proposal. MEPs called for guidelines to guarantee fundamental rights for people in prostitution.
German Social Democrat Maria Nöichl, who was the lead author, or 'rapporteur' told Euronews:
"Prostitution is not a type of work or sex work. Prostitution is a type of violence against women...We have to reduce the demand, which means to make it clear that it is not allowed to buy the body of a woman," she said.
"I think it is clear: for all things that are not allowed, for the first time there should be fines, and the second time (there should be) prison".
The report's authors argue that new guidelines will help to tackle the cross-border implications of prostitution, including human trafficking for sexual exploitation.
Former sex workers told Euronews what changes they expect from new legislation.
"What is at stake is the dignity of Europe itself, which should abide by a model of progress. What is most important is to have a model of equality, respect and good treatment of women and men. That is our aspiration, in fact," said Amelia Tiganus, a former sex worker from Spain.
Meanwhile, Marie Marklinger, a former sex worker from Germany, told Euronews that no woman wants to sell her body.
"We have to end the demand, help the women, decriminalise the women. Because right now, with the legal situation in Germany, the only ones that fear punishment from the state, or fines, are the women," she said.
But the European Coalition of Sex Workers' Rights and Inclusion criticised the report as "biased".
The NGO argues that it "ignores the body of evidence of negative impact of criminalising the clientele of sex workers", leading to higher clandestine activity and more violence.
Terry Reintke, co-chair of the Greens in the European Parliament agrees.
"What we want is to have legislative steps like, for example, a revision of the Victims Rights Directive so we can better protect those people that are affected by sexual exploitation, while not making the generalisation that all forms of sex work are gender-based violence," she told Euronews.
Several UN agencies, namely the World Health Organization (WHO) and the United Nations Population Fund (UNFPA) as well as human rights organizations such as Amnesty International and Human Rights Watch, also oppose criminalising the purchase of sex.
Last month, the European Court of Human Rights agreed to hear a case brought by sex workers challenging a French law passed for that purpose in 2016.