But a deal remains difficult due to strong opposition in a number of EU capitals, mainly in Berlin and London.

Germany, the largest net contributor to EU coffers, has resisted the idea of funding Galileo exclusively from the bloc's common budget.

This is thought to be because Berlin is concerned that it will then miss out getting unspent farm money returned to it.

National capitals are entitled to get money that is not spent returned to them at the end of the budgetary period, a sum running to around €500 million for Germany.

Instead, the country has suggested plugging the hole with two different sources - EU public finances as well as the European Space Agency's budget.

Meanwhile, UK parliamentarians in the transport committee have suggested that the entire project should be put on ice until a "new cost-benefit analysis" is carried out.

"It would be entirely unacceptable to proceed with the Galileo project at this stage without fresh and rigorous evaluations of the balance between costs and benefits", the committee said in a report released on Monday (12 November), Bloomberg reported.

"The new cost-benefit analysis should include a comparative evaluation of the zero-option of scrapping the project altogether", the report has also suggested.

According to one UK diplomat speaking to EUobserver, the lawmakers' report will be "taken seriously" by Downing Street.

London has also voiced opposition against the commission proposal and suggested that the extra expenses linked to Galileo are covered by the competitiveness budgetary chapter.

This would mean that the EU should set new priorities within the chapter.

What comes next?

So far, neither of the two proposals has won majority support among member states.

According to one EU diplomat, if Galileo was to be co-funded by the European Space Agency (ESA), the bloc could run into difficulties over the ownership of the 30-satellite system. Not all EU member countries are members of ESA and not all ESA members are part of the EU club.

On the other hand, the competitiveness chapter offers a much smaller - only about €750 million - reserve compared to the margins for agriculture and administration.

Despite the ongoing wrangling over the Galileo's funding, EU capitals seem to be firmly behind the idea of the project.

"We don't want to put it off. We are deeply convinced that Europe needs this system", German Chancellor Angela Merkel was cited as saying by Bloomberg earlier on Monday (12 November), after holding talks with her French counterpart Nicolas Sarkozy.

"We want it to happen. It's a major strategic target", Mr Sarkozy said.

Ms Merkel added that transport ministers from the two countries, Germany and France, would be asked to table a proposal on how the Galileo project could be funded later this month.

The European Parliament

According to one diplomat, the deal on Galileo funding should be reached not later than 23 November, as the European Parliament - leaning to the commission proposal - has threatened not to approve 2008 budget if there is no agreement.

Originally, Galileo, the bloc's biggest ever joint technological project, was supposed to be a public-private project, but the private consortium - consisting of eight European firms - could not agree a common commercial position.

In addition, there also were complaints of political meddling, with EU member states still pushing for their interests to be taken into account.

The setting-up of a global network of 30 navigation satellites and ground stations, meant to end the EU's reliance on the US Global Positioning System (GPS), has already been postponed from 2008 to 2012.