The European Parliament has frozen talks with EU governments on five draft laws in protest at a decision last week to reduce its say on border controls.
The European Council, grouping the 27 governments, removed the parliament's right to decide on the running of the Schengen border-free zone.
In future, MEPs will only have a consultative role on the issue.
After a heated debate on Tuesday, their leaders decided to block five draft bills connected to border security.
Announcing the suspension, the parliament speaker, Germany's Martin Schulz, said the situation was without precedent in the 18 years since he had been elected to parliament.
France's Joseph Daul, who heads the parliament's largest group, the centre-right European People's Party, blamed Denmark as the current chair of the Council.
"The Danish presidency has broken a bond of trust with this parliament," he said.
A meeting of the Council's justice and interior ministers on 7 June decided to change the legal basis for evaluating how the Schengen agreement is working, from Article 77 of the Treaty on the Functioning of the EU to Article 70.
Stripped of the right to block Schengen legislation, parliament can now effectively only delay it by procedural means.
The Council also decided to empower Schengen states to restore frontier checks temporarily in the event of surges of illegal immigrants.
In response, leaders of the European Parliament blocked five bills on:
- the Schengen border code and the convention implementing the Schengen agreement
- judicial co-operation in combating attacks against information systems
- the European Investigation Order on sharing evidence
- 2013 budget aspects relating to internal security
- EU airline passenger name records.