EU transport ministers are expected to agree at a meeting in Luxembourg on Friday to call off stalled negotiations with the consortium of eight companies and decide that all of the financing should come from public sources, officials said.

But although the project, which is supposed to create a European rival to the United States' popular global positioning system (GPS), is deeply mired in troubles, member states remain determined to get it back on track.

"No country questions the need for Galileo, which is a key project for Europe," one EU diplomat said.

Eventually comprising 30 satellites, Galileo is meant to compete with the free, military-run GPS, which is used widely in cars, boats and aircraft, by offering more precise information for a fee.

Under the original plan, public money was supposed to pay for the first four satellites and then the private consortium companies building the satellites was then to pay for two-thirds of the 26 remaining satellites.

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

However, after successive deadlines were missed as the companies argued over their share of the pie, the European Commission recommended a shake-up to member states last month that would see the whole project financed with public money.

The companies, increasingly worried that future fees may not cover their investment lay-outs, welcomed the idea as "good news", hoping that they would be retained in future tenders.

"We are back in a classic contractor schema," an official from one of the companies said. "Before we were running risks on the uncertain future commercial fees in the face of the US' free GPS."

However, funding the project entirely with public money would mean that the EU will have to cough up an additional 2.4 billion euros (3.2 billion dollars) over the 2007-2013 period on top of one billion already earmarked for Galileo.

After ministers agree on Friday that public bodies should pick up the entire tab, member states will then face delicate negotiations to hammer out the details of just how that will work before the ministers' next meeting on October 1 and 2.

The European Commission is promoting the idea of using unspent money in the EU's joint budget and which is usually given back to member states in the form of credits.

However, Germany wants governments whose companies participate in the consortium as is Berlin's case, to lift their contributions to Galileo, which would guarantee their companies' share of the work.

France, for one, is opposed to that approach out of concern that it would be too costly.

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