Previous efforts to deepen intelligence cooperation in the EU were blocked by the UK. A cross-border spy operation was seen as an unwelcome competition to the Five Eyes intelligence alliance that is made up of the US, Australia, Canada, New Zealand and Great Britain. However, with the UK leaving the EU by March 2019, London no longer stands in the way of PESCO, Politico reports.
All EU countries except Denmark and Malta will be part of the spy school.
Details of the funding, headquarters and training have yet to revealed.
Other projects that are expected to be announced include a new generation of drones and an electronic warfare capability project.
There are also plans for enhanced joint training programmes, a European medical command and projects relating to logistics such as the streamlining of cross-border military transport procedures.
Key EU member states, including France and Germany, have long campaigned for greater defence and security integration.
The idea is strongly backed by French leader Emmanuel Macron and his German counterpart Angela Merkel.
However, not all member states are on board with the EU army plot.
Dutch Prime Minister Mark Rutte said joining an EU military force would be a step too far.
He said: “The idea of a European Army goes way too far for the Netherlands. NATO is and remains the cornerstone of our defence policy.”
Mr Macron has long been a supporter of the creation of a European military and repeated calls for action during a recent radio interview.
He said: “We have to protect ourselves with respect to China, Russia and even the United States of America.
“We will not protect the Europeans unless we decide to have a true European army.
Mrs Merkel echoed Mr Macron’s calls when she said she supported a “real, true” European army.
She said: “Jean Claude Juncker some years ago said a common European Army would show the world there will never again be a war in Europe.
“I’m not saying anything about NATO of course not. We can be a good supplement to Nato.
“It would be a lot easier to cooperate if we have more than 160 weapons systems and the US only has 50 or 60. We realise that all the different instances have training and education. If we could pull this together we can work together with Nato.
“So we need a common armament systems. It’s a difficult task for Germany as we will have to develop a common European armed exports policy.”