This method uses the same principles as UEFA does to calculate its association coefficients:
Every match played (MP) in every UEFA club competition (Champion Clubs' Cup (or Champions League), Cup Winners' Cup and UEFA Cup (or Inter-Cities Fairs' Cup), but not Supercup and Intertoto cup) is taken into account: Each club receives 2 points for a win (W), 1 point for a draw (D) and no point for a lost match (L).
Moreover, participating in some rounds yields bonus points (B): 1 point for the quarter-finals, 1 point for the semi-finals and 1 point for the final. Participating in the Champion Clubs' Cup league stage yields 2 bonus points for the 1991/92 and 1992/93 seasons and 1 point for the next ones.
The ranking is then set up according to the highest number of points (Pts), then (if needed) to the best goal difference (gd) between goals for (gf) and goals against (ga), and then (if needed) to the best "goals for" amount.
The all-time table (from 1955/56 to 2001/02)

Useful links:
Euro Cups Rankings
UEFA Rankings history
Team rankings for season 2001/2002