The European Commission has released its report following a green paper consultation on Mental Health, which was launched in October 2005.
It was found that most of the respondents called for an EU mental health strategy, which could foster provision for mental health care and promote awareness as well as tackling stigma.
The report found that the impact of mental ill health on working life and social relations is negative and that many of those responding (37 per cent) hold the attitude that people with psychological problems are a danger to others.
"The importance of mental health needs to be better recognised," said Markos Kyprianou, the European Commissioner for Health and Consumer Protection.
"Good mental health of the population is a precondition for the EU's success in the knowledge economy. The situation of those with mental health problems is an indicator of the level of inclusiveness of EU societies."
According to the report, mental health problems affect every fourth European citizen at least once during their life.