"The forecast launch of the second satellite in December will now be held in March 2008," a spokesman for the launch company Arianespace was quoted by the Financial Times Deutschland as saying.

Problems with the Russian rocket Soyuz which is to place the Giove-B satellite in geo-stationary orbit were responsible for the latest setback, the newspaper reported.

The Galileo navigation system was designed to compete with the GPS system already in wide use, but Galileo has been hit by rising costs, and European Union officials had to step in when squabbling among mooted private partners caused several deadlines to be missed.

Galileo is to consist of 30 satellites orbiting at 24,000 kilometers above the earth, and provide a civilian alternative to the GPS network which is run by the US military.

The European network also promises location precision of around one metre, as opposed to 10 metres for the US version.

EU authorities are now debating whether the estimated 10 billion euro (14 billion dollar) price tag for Galileo should be publicly financed, with an extra 2.4 billion euros in unused funds from the 27-nation bloc's joint budget.

The latest forecast for the system to become operational is 2012.

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