MEPs have demanded more funds to help young people into jobs, boost economic growth and assist third countries cope with the migration crisis.
Deputies said they expect some of the additional funds should come from new appropriations to be obtained through the mid-term revision of the EU's long-run budget, the Multiannual Financial Framework (MFF).
MEPs set overall appropriations for 2017 at €160.7bn, some €4.07bn more than the budget drafted by the Commission and backed by member states, for commitments and €136.7bn (+€2.45bn) for payments.
It is doubtful if the increase will be implemented as it requires agreement from the Council of Ministers.
Reaction to the vote on Wednesday was mixed with charities ONE, Oxfam and Plan International among those welcoming the news.
A joint statement said, "The European Parliament has once again shown its support for the fight to end extreme poverty."
Tamira Gunzburg, Brussels Director at The ONE Campaign, said: "ONE welcomes Parliament's call for additional funding to EU external spending. The European Commission has also recently proposed additional funding for new initiatives such as the external investment plan.
"While the Parliament and Commission show that the budget's ceilings must urgently be increased, they still do not cover all of the EU's new commitments made since the refugee crisis.
"Existing development aid meant for eradicating extreme poverty remains at risk of being diverted. In the upcoming negotiations, EU member states must now also get with the times and mobilise sufficient funding beyond the outdated ceilings.
"Only this way can the EU both address the refugee crisis and continue working toward its promise to end extreme poverty by 2030."
Alexandra Makaroff, Plan International's EU Representative, added: "Parliament has once again supported a strong EU external aid budget, and member states must follow this example by reversing the cuts they have proposed to development and humanitarian aid budget lines.
"The EU can't meet its existing commitments to tackling poverty and supporting sustainable development in the world's poorest countries otherwise. As these negotiations proceed, it's crucial to preserve not only the amount of aid but also its purpose.
"EU development cooperation must have, at its core, poverty eradication. It is not, and must not become, a security and migration management tool."
However, some MEPs said the EU budget increase is “"unnecessary and unacceptable."
Extra spending on areas such as security, agriculture and the migrant crisis can be accommodated without increasing the overall EU budget, UK Conservative MEPs said.
Conservative budget spokesperson Richard Ashworth said the existing budget is sufficient to cover the additional spending, adding, "The EU is having to respond to new demands and we understand and support that. However, Parliament's default reaction is to call for a bigger budget and that is not acceptable.
"Even when money is being spent for the right reasons we have a duty to taxpayers to exercise fiscal discipline, achieve value for money and have clearly stated objectives.
"Thanks in no small part to the efforts of Conservative MEPs we now have greater flexibility in the system to move money between different spending areas and Parliament must get better at using those powers.
"This extra spending can and must be met by reallocating existing resources. Unfortunately, there is little evidence to suggest Parliament has come to terms with this and is ready to alter its priorities."