The 27 countries of the European Union (EU) agreed on late last week to scrap the partnership with the private sector behind Europe's most prestigious technology project, the Galileo satellite navigation system.

By taking Galileo public, the EU will follow the lead of the US, as well as the approach adopted by Russia and China in their pursuit of similar geopositioning systems.

The EU originally planned for a consortium of companies to bear two thirds of the €3.4 billion (£2.3bn) development cost, but the consortium failed to agree on how to organise itself.

The companies also doubted the venture's commercial viability because it would face competition from Russia's GLONASS and China's Beidou systems, as well as from the US Global Positioning System (GPS) network that is currently being modernised.

Last month, the European commissioner for transport, Jacques Barrot, proposed taking the project public and after little hesitation, national governments agreed.

Ministers meeting in Luxembourg on Friday "unanimously agreed that work with the concession holders should be terminated and that the next phase would be considered under the responsibility of the public sector," said German Transport Minister Wolfgang Tiefensee, who presided over the meeting.

"Galileo is at present the most important European high-tech project. It is of colossal importance," he added.

A final decision on exactly how to fund Galileo is likely to be made "in early autumn" after Portugal takes over the six-month rotating EU presidency from Germany.

"We must prove our worth in comparison with the United States, Russia, Asia," said Barrot. "If we finance the construction of all satellites it'll cost us about the same amount as 4,000 kilometres of motorways. This is an effort Europe should make."

Galileo will be a network of 30 satellites beaming signals to receiving devices on the ground, helping users pinpoint their locations. It is intended to be interoperable with the US's 24-satellite GPS network, thereby more than doubling existing GPS coverage.

Galileo will also be more exact than GPS, with precision of up to one metre (3.3 feet), compared with five metres with GPS technology. And unlike GPS, which is controlled by the US military, it would be a civilian-based system and could not be turned off.

China's Beidou and Russia's GLONASS navigation systems are expected to be operational in the next three years, and although their primary role will be military, they will also compete for commercial contracts as well.