Facebook must make widespread changes to improve privacy, the Irish Data Protection Commissioner has said, including making its terms and conditions clearer.
The social network must also stop keeping indefinitely data about what adverts its non-American users click on and the site has also agreed to keep all user data received from third-party sites anonymous.
Data gained from third-party sites must be made anonymous within 10 days and completely deleted after 90 days. All Facebook can do with this data is share how many people clicked on an advert.
Facebook Ireland has responsibility for all non-US and Canadian data that passes through the social network, and has had this control since September 2010.
The site must also improve users' control over social adverts and simplify how it explains its privacy policies; on Thursday Facebook added a new informational page explaining more about how the site uses our data and how adverts are used.
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The changes must take place within six months and will affect all users outside of the United States and Canada - totalling some 500 million users.
Commissioner Billy Hawkes said: "This was a challenging engagement both for my office and for Facebook Ireland. The audit has found a positive approach and commitment on the part of FB-I [Facebook Ireland] to respecting the privacy of its users."
Last month, Facebook announced an agreement in America with the Federal trade Commission to formalise its commitment to provide users with control over privacy and sharing.
Richard Allan, director of public policy for Facebook EMEA said that the website has agreed to "Offer additional notifications to European users about Facebook's photo Tag Suggest feature so that they can decide whether or not to use this feature to help people tag them in photos."
As well as "Change a number of our policies related to retention and deletion of data including how data is logged when people access websites with social plugins to minimise the amount of information collected about people who are not logged in to Facebook," and finally "Work with the DPC to improve the information that people using Facebook are given about how to control their information both on Facebook and when using applications".
Mr Allan concluded: "we would like to thank Commissioner Billy Hawkes and Deputy Commissioner Gary Davis and their team. As a result of their work, we are better able to give people the ability to connect and share and make the world more open. We have benefited from the open, honest and cooperative relationship and look forward to continue working together."
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