Europe's plans for its own global satellite navigation system have been given the go-ahead after a deal ended long-standing US objections.

The EU and US confirmed yesterday that Europe's Galileo project will now be developed in cooperation with the US Global Positioning System (GPS).

The EU hopes to have the €3.6bn (£2.4bn) system in place by 2008. The project has been dogged by problems over costs and stormy negotiations with Washington, which feared it could interfere with GPS signals.

Three consortiums have been shortlisted to bid for the concession to launch and operate Galileo. China, India, Russia and Israel have all expressed interest in investing in the project.

Europeans are keen to push on with Galileo so they are not tied to using GPS, which is controlled by the Pentagon. Jacques Chirac, the French president, had warned that European countries risked becoming "vassals" if the system was not approved.

The US had maintained that its concerns were linked to national security. Some Europeans had argued that the US did not want Galileo to be better than GPS in order to defend national business interests.