Chinese officials at the Toulouse Space Show have announced plans to put an Asia-wide satellite positioning system in place by 2010 to work alongside the US GPS and European Galileo programmes.

The Beidou/Compass system already has four satellites in position. It will be free to use, but will include an encrypted channel for "authorised" users.

Chengqi Ran, vice director of the China Satellite Navigation Project Center, said that Beidou/Compass would be "a highly reliable signal dedicated to complex situations".

The final network will comprise 30 satellites in low Earth orbit linked by a further five in a geostationary position at a higher altitude. The network will cover Asia by 2010 and the first satellites have already been launched and are functioning well.

It is "highly likely" that the Beidou/Compass system will be compatible with Galileo, since China is a major investor in that scheme.

The GPS market is currently worth about $5bn in China and officials claimed that they are keen not to disrupt consumers.

Paul Verhoef, head of the Galileo unit at the European Commission, which is financing Galileo's development, said: "Our position with the Chinese is that we need to make sure we all have the same understanding of the problem.

"It has taken the Chinese a while to realise that it is in their interest to [coordinate signals and other compatibility issues] if they want to be in this community of providers."

The move also has wider security implications. Many modern weapons systems use satellite positioning, and GPS was originally a military-only service.

The system was opened up for public use after the Korean Airlines Flight 007 disaster in 1983.