Gianni Pittella accused the European Council of undermining political decisions and called for action to combat the stalemate.
And he urged European Commission President Jean-Claude Juncker to show “courage and vision” when he delivers his State of the Union address tomorrow.
Writing on politico.eu, Mr Pittella said: “The European Union needs to update its core functioning.
“To speak frankly, the real problem in the EU is the European Council, which far too often wields the veto that undermines the decisions taken by the European Commission and the Parliament.
“Revising the EU’s treaties to address this can no longer be taboo. The EU’s structure needs to change if we want more democracy and better balance in how we function.
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“The Commission must adopt extraordinary measures to overcome this stalemate. The Parliament is ready to throw its institutional and democratic weight behind this battle for change.
“Confronted with a sluggish Council, the Commission and Parliament should work together to establish an alliance to strengthen democracy.”
Mr Pittella said improving democracy would make economic governance more effective and transparent and called for the the establishment of a eurozone finance ministry ran by accountable politicians rather than obscure bureaucrats.
He criticised the Hungarian and Polish governments for trying to transform their democracies into illiberal regimes.
And he said the EU’s responses to the migrant crisis and terror threat were both inadequate.
He also said the time had come for Brussels to stop naively supporting neoliberal globalisation and start backing European industry and manufacturing.
Mr Pittella said: “If we want to live up to people’s expectations, the EU must also be at the forefront of the battle for democracy within its own ranks.
“The future of Europe will depend on our ability to deliver real change in the next 18 months.”
The MEP added: “The wind is changing in Europe. After the disaster of Brexit, citizens are more aware than ever of the need for a stronger Europe.
“A new European momentum is gathering. But for it to get traction, we need to live up to voters’ expectations with actions, not just words.”