BRUSSELS -- Squabbling European governments are delaying a 3.2 billion euro ($3.14 billion) satellite project which the European Union says will create 140,000 jobs, an EU official said on Tuesday.

The official, who declined to be named, said Italy and Germany were arguing over who would lead the European Space Agency (ESA) on the Galileo Satellite Navigation Project, aimed at being a rival to the U.S. Global Positioning System (GPS).

"The problem is that ESA's half of the budget is still not committed because of the problem between Italy and Germany," said the official.

In a progress report on Galileo published on Tuesday, the European Commission said there had been delays caused by problems over finalizing each country's contribution, Reuters said.

"Some member states are, mainly for political reasons, claiming the status of the foremost contributor to the program," the report said.

The official said Italy wanted the lead role because it had been involved early on and it was not leading other ESA projects, such as the French-led Ariane rocket program.

But Germany had also put itself forward as the project leader on the basis of its financial contributions to ESA.

The European Commission is sharing the 1.1 billion euro development cost with ESA and is ready to begin work but cannot do so until ESA's members agree, the official said.

According to ESA, Galileo's network of 30 satellites will give users around the world more exact location-finding and time readings than ever before when it comes into operation in 2008.