The future of the project now appears secure after the EU Council of Ministers agreed to raise an additional €2.4 billion to launch the system into the sky.
The 30 satellites that will make up the Galileo system will provide guaranteed real-time positioning accurate to less than half a metre.
The council agreed to divert e1.6 million of unspent agricultural subsidies to meet the lion’s share of these additional costs.
Galileo will now be operational in 2013 – five years after the original timetable launch date of 2008.
The British government had been advised to consider abandoning the Galileo project because of the massive additional costs.
The package was negotiated with the European Parliament, whose budgets spokesman Kyösti Virrankoski said: “We had ended up in a severe situation. We had to decide whether we continued with this project or not.
"Fortunately, we have reached agreement on continuing and completing this project.
“For European industry it means we will no longer be dependent on American, Russian or Chinese systems, as we will have a system of our own. This will improve the knowledge and technical level of European industry.”
The Galileo network is designed to provide navigational services to transport users that are more accurate than those available through the American GPS system.
However, progress towards building the EU system has been stalled by arguments over which electrical and industrial businesses would get Galileo construction and service contracts.
The deal was also welcomed by the EU’s current Portuguese presidency.
Its finance minister Augusto Santos stressed that the agreement would not affect planned spending on any EU projects until 2013.