Leaders of wider Europe approved a "Register of Damage" on Wednesday to document the damage in Ukraine caused by the Russian forces so Moscow could be held liable for compensation.
It was a "first, necessary, urgent step" ensuring "justice that is centred on the victims" of the war, said council head Marija Pejcinovic Buric said.
By early Wednesday, 40 countries had signed onto the creation of the register, another three countries were finalising internal procedures to do so.
German Chancellor Olaf Scholz said the register would play "a central role...to punish the war crimes of the Russian occupiers and to demand accountability for the enormous damage that Russia inflicts on Ukraine day after day."
His sentiments were echoed by other leaders of the 46-nation CoE, the continent's preeminent human rights organization.
"The register is just one of a number of international initiatives set up to ensure accountability for the crimes inflicted in Ukraine," British Prime Minister Rishi Sunak said.
"When we think in terms of reconstruction, it's an enormously important judicial element to have this register of damages to give justice to the victims," European Commission President Ursula von der Leyen said.
The United States, who attended the summit as an observer, Canada and Japan also supported the creation of the register.
UK and the Netherlands pledge fighter jet support for Ukraine
President Volodymyr Zelenskyy addressed the gathering in Reykjavik via video link, thanking Europe for its support for Ukraine.
"Russia is trying very hard to improve its ability to kill. We are trying very hard to improve the protection of our people," he said.
"And I thank all the countries and leaders who help us to improve our air defence altogether. We are showing what our 100% mean and what the power of the free world means."
After meeting on the sidelines of the summit the Dutch Prime Minister Mark Rutte and Britain's Sunak pledged to build an "international coalition" to provide fighter jet support for Ukraine.
"The Prime Minister and Prime Minister Rutte agreed they would work to build (an) international coalition to provide Ukraine with combat air capabilities, supporting with everything from training to procuring F16 jets," a spokesman for Sunak said.
Scholz aims to keep bridges to 'another Russia' standing
The CoE kicked Russia out of the after it invaded Ukraine last year.
Despite that, the German Chancellor said it was important to maintain contact with Russia.
Russia's war on Ukraine would end at some point, Scholz said. "And one thing is certain. It will not end with a victory for Putin-style imperialism," he added.
"Until then we as the European Council should keep the bridges standing to the representatives of another Russia, another Belarus - and in this way keep open the perspective of a democratic, peaceful future in both countries - no matter how unlikely it seems to us today," Scholz said.
What else is on the CoE agenda?
It is only the fourth summit of the 46-member Council of Europe since it was founded after World War II.
Icelandic organizers said that as well as showing support for Ukraine, the meeting would boost initiatives to address emerging threats to democracy, from climate change to artificial intelligence.
The British Prime Minister Sunak met European Commission President von der Leyen on the summit's sidelines.
Sunak's office said they agreed to strengthen cooperation on migration with a new working arrangement between British agencies and the European Border and Coast Guard Agency.
Sunak said he was also pressing for a reform of the European Court of Human Rights as part of a strategy to stop small boats carrying refugees from reaching Britain after transiting through France.
The court previously halted his government's plan to fly asylum seekers from the UK to Rwanda.
"We're going to do absolutely everything we can to do that... I'm not going to rest until we can stop the boats and that's why I'm here," Sunak said.
Meanwhile, Turkey faces removal from the CoE after it failed to implement a 2019 court ruling to release jailed businessman and activist Osman Kavala.
lo/rt (dpa, AFP, Reuters, AP)