GPS replacement held up by money wrangles

The European Union and the European Space Agency have already pledged E1.1bn over the next five years to develop the system - called Galileo - but industry partners have not yet committed the further E2.1bn required to deploy the satellites.

Galileo will be made up of 21 satellites, and promises to revolutionise the future of location-based information systems for mobile phones, logistics firms, traffic management bodies and the military.

Late yesterday, transport ministers released an initial E100m following last year's E200m pledge from unnamed industrial players including service suppliers, operators, equipment suppliers and space system manufacturers.

But that still falls short of the E3.2bn total required to complete the system by 2008.

EC vice-president of transport and energy, Loyola de Palacio, claims Galileo will create a potential market of £9bn a year and should generate 140,000 jobs. However, many industry figures remain unconvinced that they will get significant returns on their investments.

If industry and politicians fail to reach an agreement, Western Europeans will be forced to continue using the American GPS system, which is funded and managed by the US Department of Defense.

Both it and the Russian Glonass system are prone to disruption, but Galileo's backers claim their civilian-run alternative guarantees reliability and higher quality transmissions, and will be able to locate people and objects to a precision of one metre,