A WTO arbitration panel was asked by major sugar exporters Australia, Brazil and Thailand to decide when the EU would have to implement the WTO's original ruling, issued in 2004.
The EU later lost an appeal against that decision, and must now bring its sugar policy into line - or risk trade sanctions.
"The 'reasonable period of time' will ... expire on 22 May 2006," the WTO ruling said, referring to the period needed by the EU to implement the WTO's 2004 ruling.
The European Commission, which administers foreign trade on behalf of the EU's 25 member states, said it would study the latest WTO ruling carefully and do its best to comply.
"We will of course do all we can to respect our international obligations," said Michael Mann, the Commission's agriculture spokesman.
"The EU has embarked on a far-reaching reform of the EU sugar regime that will significantly reduce exports and deal effectively with the roots of the concerns that were behind the (WTO) sugar panel," he said in a statement.
EU agriculture ministers are hoping to agree a radical sugar reform next month that would go a long way toward WTO compliance and overhaul a subsidy-heavy policy that has survived virtually untouched since its birth in the late 1960s. But that reform, if agreed, would enter into force only in July 2006, the start of the next EU sugar marketing year.
Diplomats said the EU's most likely move would be to press ahead with its reform plan - the current version calls for steep cuts in output and support prices, with an inevitable slide in exports - and risk trade sanctions for a few weeks.
Last year the WTO said several million tonnes of surplus EU sugar production, so-called "C" sugar, which should be exported without subsidies, was benefiting from state aid.
The Geneva-based body also found that the EU, which imports sugar from former European colonies at inflated prices, could not export a similar amount at reduced prices on the world market to recover some of the cost. The three complainants also argued successfully that EU subsidies to sugar beet producers allowed EU farmers to undercut world prices and grab export markets.
Brazil, the world's biggest producer and exporter of sugar, said the elimination of subsidies would expand the world market by around five million tonnes a year or about $1.48 billion, based on current prices.
Brazil said that it expects its sugar sales to increase by up to $700 million per year once subsidies are removed and that EU compliance with the ruling was crucial to allow progress in the current Doha development round of WTO talks. "Today's result is satisfactory for Brazil because of the period set by the referee," the country's foreign ministry said in a statement.