The resolution was adopted with an overwhelming majority, at the parliament's plenary session in Strasbourg.
Croatia should do its utmost to carry out the necessary reforms so that the negotiations can be concluded in time for the European Parliament to give its assent before the next EU parliamentary election in June 2009, the resolution reads.
The resolution, which is not a legally binding document, commends Croatia for the progress it has made so far on the way to EU accession.
It emphasises that a thorough reform of the public administration, judiciary and police is a prerequisite for achieving standards necessary for EU membership.
The document also supports the government and opposition in their efforts, despite the forthcoming elections, to take necessary, albeit sometimes difficult decisions, particularly in the field of competition policy and state aid, and points out that those decisions will ultimately benefit all Croatian citizens.
Croatia has been commended also for cooperation with the Hague-based UN war crimes tribunal, but the resolution also conveys concern that the effective prosecution of war crimes might be undermined by hostility at local level, persisting bias amongst some of the judicial staff against non-Croatian nationals and insufficient protection of witnesses against intimidation.
The document mentions concern about certain initiatives taken by the government, notably its offer to support the defence costs for army generals and its request to act as amicus curiae in cases pending before the ICTY.
Regarding some problems about the identification of the state border between Slovenia and Croatia, deputies adopted a joint amendment of the European People's Party - European Democrats (EPP-ED) and the Socialists and the Greens to call on Croatia to try to solve outstanding border issues with the neighbour bilaterally.
MEPs urged both the Croatian and the Slovenian governments to exploit all the opportunities available in order to reach an agreement on all their pending border issues, taking into account the agreements reached so far and the conclusions of the European Council of 17-18 June 2004 and invite them to abstain from any unilateral action which might undermine such an agreement, according to a statement on the EP website.
MEPs also propose to "recourse to the good offices of a third party if solutions cannot be found bilaterally to outstanding border disputes".
However, it is not explicitly defined what the third side can be and that is why it can be interpreted as asking a third side to mediate or going before an international judicial body, which is actually arbitration.
MEPs also rejected a series of amendments moved by deputies of Italy's "Alleanza Nazionale", who are part of a nationalist and Euro-sceptic group called the Union for Europe of the Nations Group and who asked that Croatia be reproached for discrimination against Italians who left Croatia in the wake of the Second World War.
The single-chamber parliament urges "the Croatian authorities to take into due consideration the concerns raised by local communities and public opinion with regard to controversial industrial projects which might pose a threat to the environment or public health, and calls on them to set up a clear and transparent procedure whereby all stakeholders, and not merely investors, can be informed and consulted," according to the EP website.
Before adopting the resolution, the European Parliament held a discussion on the document that was based on Croatia's progress report and 24 draft amendments to the report.
During the 30-minute debate, all the 16 parliamentarians who were engaged in the discussion praised Croatia's progress and pointed out the importance of the ongoing reforms.
The Rapporteur for Croatia, Hannes Swoboda, who compiled the report, said that it was an objective and fair document underling the positive sides as well as what remained to be done.
He also stressed the importance of the resolution's section mentioning 2009 as a prospective year for Croatia's entry into the EU, saying that it was well known that it was difficult to reach a consensus in the EU about enlargement.
Swoboda, a Socialist member of the European Parliament from Austria, pointed out that incumbent Croatian Prime Minister Ivo Sanader had done a great job for Croatia in recent years, and extended gratitude to a former PM, the ailing Ivica Racan, saying he had opened the EU's door to Croatia.
Speaking on behalf of the European Commission, Commissioner Vladimir Spidla said that negotiations with Croatia had started well and that the screening gave a realistic picture of what Croatia had done and what remained to be done.
We hold that it is an urgent need for Croatia to continue with reforms and achieve results in the reform of the judiciary and the public administration and in the struggle against corruption, Spidla said.
A German parliamentarian in the EP and a deputy of the EPP-ED Group, Bernd Posselt, said that Croatia should have already become an EU member.
From the point of view of historical justice, Croatia should have joined the EU together with Hungary and the Czech Republic three years ago, according to Posselt.
Croatia's accession was halted due to the several-year-long occupation of a part of Croatia by the neighbouring country, but Croatia is now finally on the right track to join the EU, Posselt said.
Three Slovene MEPs who took part in the discussion welcomed the compromise regarding the amendment calling on Croatia and Slovenia to use the services of a third party in case they cannot bilaterally resolve their border dispute.
Posselt later told reporters that interpretations that the EP supported the Drnovsek-Racan agreement on the Slovene-Croatian border issues were not correct.
The agreement was not ratified and it does not exist, so it is necessary to seek a new agreement, which is recommended in the text of the resolution, the German politician said and reiterated that the unresolved border issues with Slovenia could not be an obstacle to Croatia's joining the EU since Slovenia did not have that problem settled when it joined the EU either.