The UK is considering launching its own satellite navigation system to rival the EU's Galileo project after being shut out of key elements of the programme, according to reports.
It comes after a row with Brussels over whether Britain can be trusted with sensitive European security information after the country voted to leave the bloc, the Financial Times reported.
Galileo is the EU's Global Satellite Navigation System (GNSS) which provides accurate positioning and timing information.
Business Secretary Greg Clark is reportedly taking legal advice on whether the UK Government can recoup the €1.4bn (£1.2bn) it has invested in the programme since 2003.
Mr Clark warned the European Commission's actions could threaten continuing "mutually beneficial" defence and security co-operation with Britain after it has left the EU.
He added the Government would continue to ensure the UK was able to take advantage of the new opportunities offered by the "commercial space age".
"We have made it clear we do not accept the commission's position on Galileo, which could seriously damage mutually beneficial collaboration on security and defence matters," he said.
"Given the UK's integral role in the programme, any such exclusion could cause years of delays and a cost increase stretching into the billions.
"We will continue to work with the UK space sector on this issue and through our modern industrial strategy will ensure the UK can realise the opportunities of the commercial space age."
The Government is said to be fighting back by preparing to block the procurement of the next batch of Galileo satellites – intended to rival the United States system – at a meeting of the European Space Agency council in Berlin.
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The EU's chief Brexit negotiator, Michel Barnier, reportedly said: "Galileo needs to be prepared for Brexit… The EU cannot share security relevant proprietary information with countries outside the EU."
A UK Government official reportedly said the EU was "playing hardball".