"Negotiations are currently ongoing and we hope they will unlock the situation and that Spain will remain" on board the 1.5-billion-euro (1.95 billion dollars) project meant to be in space in 2010 and operational from 2011.

Galileo is aimed at breaking Europe's dependence on the free US Global Positioning System (GPS), used aboard many cars, boats and aircraft.

The project links Britain's Inmarsat, the European EADS consortium, French firms Thales and Alcatel, Spain's Hispasat and Aena and Italy's Finmeccanica.

Last week, a British industry insider, speaking on condition of anonymity, accused Spain's Hispasat of being behind the delays.

"It is Hispasat of Spain which is causing the block, nobody else," the source said.

"They are demanding work that has already been allocated to France, Germany and Britain. They are demanding a new ground station as well, and they are demanding more of the satellite building work and the operational value of Galileo."

A French source also pointed the finger at the Spanish.

Neither Hispasat nor Aena commented on the accusations.

On March 15 the European Commission warned it would examine new ways to complete the system and, in a letter to the European Union's German presidency, Transport Commissioner Jacques Barrot requested a mandate to study "reasonable alternatives" to the current consortium of eight private contractors.

Barrot's spokesman said the timetable for putting the system in place, which would ultimately involve around 30 satellites, had already been delayed until 2011, and that more slippage was expected.

The Financial Times newspaper said there were also doubts whether Galileo could attract enough revenue.

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