Before a meeting of the 27 EU transport ministers began in Brussels, French junior transport minister Dominique Bussereau declared himself "pretty optimistic" that the project, seen as a a showcase for Europe's technical prowess, would receive the political green light.

"Things aren't progressing too badly ... if all goes well we should be able to reach an agreement quickly," he predicted.

The EU's satellite navigation system, which is supposed to be up and running by 2013, aims to break Europe's reliance on the US military-run Global Positioning System (GPS).

Although Galileo has already suffered numerous setbacks, the EU still has high hopes that it will spur the development of numerous new technologies that will make the wait worthwhile.

Satellite navigation, which allows users to pinpoint their location anywhere on Earth, is expected to be at the heart of new technologies for steering cars or guiding boats as they arrive at ports, or airplanes as they come into land.

It could also be used in accident assistance, search and rescue missions, monitoring fishing boats or container ships as well as mineral prospecting by miners, building pipelines, financial transactions or various leisure activities.

One of the main areas of suspense was a row between Italy and Spain on where the system's control stations will be sited.

On Wednesday, the Spanish side threaten to hold up the political agreement if it is not satisfied.

"It would be very difficult to accept something that doesn't suit us," a Spanish diplomat said.

Spain wants what Germany and Italy have been promised, a full Galileo control centre to monitor functioning of the 30 satellites the system will need.

The Spanish could end up with a test centre, said Bussereau.

German Transport Minister Wolfgang Tiefensee said he was sure a solution would be found Thursday, while warning that the talks could continue late as "there are a number of divergent positions."

Berlin has fought hard to host a control centre, deeming that a just reward for its investment in the project.

Competition rules would dictate that contracts be awarded on a best-offer basis. But the European space industry is concentrated into a few main groups, including the European EADS subsidiary Astrium, in which Germany has a major role, and the Franco-Italian Thales Alenia Space.

Funding for the first four satellites, only one of which has so far been launched, has already been agreed, leaving 26 others to be decided.

Budget ministers and EU lawmakers paved the way for agreement on Galileo's future last week by striking a deal on how to fund it.

They agreed to fill a 2.4-billion-euro (3.5-billion-dollar) hole in Galileo's financing entirely with money from the EU's 2007 and 2008 budgets.

Of that figure, two-thirds will come from unspent farm aid budgeted this year and the rest will be drawn from funds earmarked for research next year.

Work on Galileo stalled earlier this year as cost over-runs piled up, the private contractors bickered and member states lobbied for their own industrial interests.

As the original public-private partnership involving a consortium of eight European companies fell apart, the European Commission recommended that the project should be relaunched using public money entirely.

In a sector as specialised and concentrated as the space industry, the same companies will be in the running for new contracts, although some smaller newcomers are also likely seek a share of the work.

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