Britain has told the European Union it will demand the repayment of upto 1 billion pounds ($A1.8 billion) if the bloc restricts its access to the Galileo satellite navigation system, Europe's version of GPS.
A senior EU official quickly dismissed the threat, saying there was no basis to any such demands.
A row over Galileo has become the latest flashpoint in Brexit negotiations after London accused the EU of shutting British businesses out of the project before Britain's exit in a year's time. The EU has said it is honouring the existing laws.
But, once Britain leaves the bloc, the executive European Commission says London can no longer be trusted with sensitive data providing a secure back-up for the new satellite system, even though it was heavily involved in its development.
Britain for the first time formally set out its conditions for participating in the Galileo project after it leaves the EU on Thursday, making unrestricted access a condition for future a broader security collaboration.
The Brexit ministry published a paper raising the prospect of the government recovering its investment. It said without British help the project would take three years longer and cost an extra 1 billion euros to complete.
Millions of consumer devices globally use the global positioning system (GPS) developed and controlled by the US. Europe has been building on its own rival version for 15 years, due for completion by 2020.
The EU says Britain will be able to continue using Galileo's open signal, but Britain's military could be denied access to the encrypted version when the satellite becomes operational. Britain is demanding unrestricted security and industrial access to secure elements of the project.
London has also signalled its determination to press ahead with the development of its own satellite navigation system if the EU continues to insist that it will be barred from the secure elements of the project.
Experts say a rival British satellite navigation system could cost about 3 billion pounds and Britain has said its exclusion from Galileo would undermine talks on a proposed future security partnership with the EU.
