Europe's grand plan to build its own version of the American GPS (global positioning system) has run into a financial roadblock and could be cancelled unless approved at a meeting of EU heads of state in Brussels later this week.

Last week, European transport ministers at a meeting in Brussels failed to approve funding for the EU's half share of the £1.6bn needed to fully develop the satellite-based Galileo location system. Loyala de Palacio, the EU Energy and Transport minister, said that unless the funding gets quick approval by the end of the year "the Galileo project will go up in smoke".

Last month the European Space Agency approved over £300m in funding for Galileo. But development can't proceed without matching funding from the EU, and the project failed to receive approval from the needed majority of eight EU transport ministers.

Countries opposed to funding the system expressed concern about the Galileo's cost/benefit ratios and the need for EU funding for more than 20 years — even though the system is designed to be self-supporting through user charges for advanced positioning and location services and taxes on terminals.

The EU had originally backed Galileo to avoid dependence on the US GPS system, which is funded by the Defense Department and subject to shutdown, jamming or manipulation in time of war.

Dual-band Galileo/GPS receivers would also provide greater accuracy than single-channel receivers. GPS receivers are used in a variety of enterprise applications including surveying, fleet management, aircraft navigation and truck and cargo tracking systems.

"It will be a shame if the plug is pulled on Galileo," said Richard Langley, a professor of geodesy at the University of New Brunswick. "There are real technological advantages, besides the economic and political ones trumpeted by the [EC], to having Galileo operating alongside GPS.

"A dual-constellation global navigation system will offer increased accuracy, integrity, availability and continuity compared to GPS operating on its own," he said. "A lot of research and development work on designing Galileo has already taken place. All that work will be for naught if the EU pulls the plug."