The European Union (EU) has given the nod for an Eu3bn European network of global positioning satellites.
The Galileo system will provide competition to the American global positioning satellite (GPS) network and provide precise navigational data.
European transport ministers agreed to go ahead with the project at a meeting in Brussels.
The EU is investing more than Eu0.7bn to get the Galileo project off the ground and a larger, but unknown, amount of private finance is believed to be involved.
It is understood that the EU investment will pay for a four-year development program which will test the technology before the entire network of 30 satellites is deployed.
EU Transport Commissioner Loyola de Palacio told a news conference on Tuesday: "We now have a 'yes' for Galileo which signifies Europe's wish to be present in the international scene in the areas of research, technology and industrial development."
The US is unhappy about the project, which it fears will have security implications, because GPS is a military-run network and can be shut down if an enemy attempts to use the data to launch guided missiles.
The Americans are worried that a civilian-run Galileo will have an 'always on function', meaning it could be used by anyone wanting to direct missiles to a location.
The French transport minister, Jean-Claude Gayssot, said: "Only the realisation of this civil system will allow the beginning of the development of the use of satellite navigation in conditions which are suitable for Europeans. It will allow the European Union to liberate itself from dependence on the American GPS system."
Galileo will be fully operational in 2007.
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