The EU's executive arm said it could raise the extra 2.4 billion euros (3.3 billion dollars), required to finance the project in the 2008-2013 period, through unused funds from the bloc's joint budget.

"I am still convinced that Europe needs Galileo," said European Commission vice president Jacques Barrot.

"Today I have come up with all the facts and figures to enable the European Parliament and ministers to take the necessary decisions on the programme and its funding by the end of the year."

Galileo is designed as an independent European alternative, for civilian use, to the free, military-run global positioning system (GPS) in the United States.

Promising location precision of around one metre, as opposed to 10 metres for the US version, the Galileo system, due to be up and running by the end of 2012, has so far failed to get off the ground.

Critics have warned that the costs could keep rising and have questioned the logic of replicating the existing, free US service.

The new funding package, in addition to the billion euros already paid out by Brussels, was made necessary after a consortium of private companies failed to agree on their share of the pie.

That scuppered the original plan for a public-private partnership to launch and run the 30-satellite network.

Under the new scheme, which must yet be approved by the 27 member states and European Parliament, Barrot said most of the money could be found from the EU's agricultural budgets for 2007 and 2008 and the rest from funds earmarked for running the European Union institutions.

"These margins are usable without the least diminution of the programmes concerned," argued Barrot.

For example a rise in world agricultural prices was reducing levels of subsidies paid to farmers, he added.

Anticipating some opposition from member states over the budget-juggling, Barrot warned that if there was no agreement then EU leaders would have to decide by the end of the year "are we, or are we not, prepared to put Galileo into orbit?"

The financing scheme could hit opposition from a number of member states, notably Germany, where industry sees a large role in Galileo.

Earlier this year Berlin leaned towards another option, additional funding from interested governments funnelled through the European Space Agency (ESA).

Barrot said Berlin was primarily concerned with assuring a role for its own industry in the project.

"We have provided formal assurances" to Germany, he added, referring to the hosting of one of the two Galileo control centres in Munich.

ESA, which will draw up plans for handing out construction projects, will have to do so while assuring both "competition and satisfactory distribution," he added.

Industries in France, Germany, Italy and Spain are particularly involved in the project.

While Europe has dithered over Galileo, Russia and China have been working on similar projects while the United States is updating GPS, already used widely in cars, boats and planes.

Under the original plan the private companies involved -- AENA, Alcatel, EADS, Finmeccanica, Hispasat, Inmarsat, TeleOp and Thales -- were to cover their investment costs by operating the satellites and collecting the fees once they were in operation.

However, after successive deadlines were missed as the companies squabbled, the European Commission decided to go the public funding route.

Not wanting to be left out in the cold, the main industrials involved -- Astrium (EADS group) and Thales Alenia Space (Thales and Finmeccanica groups) -- have stressed in recent months their wish to pursue industrial cooperation in the project.

EU transport ministers will meet in Luxembourg on October 2 to examine the options for Galileo.

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