European nations have approved funding for a new Ariane 6 space rocket pooling their resources in a single, simplified version to tackle growing international competition.

The new, lower-cost rocket will replace the current Ariane 5 from its first launch in 2020, French Research Minister Genevieve Fioraso said after ministerial talks in Luxembourg.

Science ministers from the 20-nation European Space Agency, which last month made headlines by landing a probe on a speeding comet, also approved European funding for the International Space Station (ISS) and a further mission to Mars.

Ariane 6 will account for about half of the €8bn budget approved by ministers over ten years.

"This decision will safeguard 16,000 direct jobs in France and 35,000 in Europe," Minister Fioraso said.

The agreement resolves a two-year strategy dispute between France, which backed the new rocket, and Germany, which had favoured an interim upgrade to the current technology.

At a previous meeting two years ago, the nations settled for a compromise that would have seen both projects go ahead at greater cost.

Ariane 6 will incorporate part of the studies for the abandoned upgrade, which was seen as key for German jobs.

Roberto Battiston, president of the Italian Space Agency, told reporters earlier that Europe had no choice but to bury differences to stay in the $6.5bn space launch industry.

"At the end of the day, it must turn out to be something which can be competitive on the world market of satellites," he said on the sidelines of the one-day meeting in Luxembourg.

As part of the deal struck on Tuesday, Germany secured agreement on €800 million in funding for European ISS participation and the 2018 Exo Mars mission to the red planet.

The move to proceed with a leaner Ariane 6 without further delay is designed to reduce costs in the face of US newcomer SpaceX.

Japan and India also pose a growing challenge.          

Meanwhile, one of two European global positioning satellites put into the wrong orbit earlier this year has been recovered and could still be used for its intended purpose.

Galileo 5 and 6 were launched in August, but a technical hitch during their deployment left them in elliptical rather than circular orbits.

The craft were to form part of the Galileo project - a European Union controlled constellation of what will eventually be 30 satellites used to provide global positioning services.

But the problem left doubts over whether the satellites could be used, because although they were functioning, they were in an elongated orbit travelling up to 25,900km above earth and back down to 13,713 km rather than completing a circular one.

After 11 manoeuvres over 17 days, the European Space Agency said the fifth satellite has now moved to a more circular orbit which will see it pass the same point on Earth every 20 days, rather than ten as planned.

If the sixth satellite can be placed successfully in the same orbit as the fifth, but on the other side of the world, it may be possible to get them both working as part of the project.

"The decision whether to use the two satellites for navigation and (space radar) purposes as part of the Galileo constellation will be taken by the European Commission based on the test results," the ESA said in a statement.

The difficulty was just one of a series of setbacks to the €7bn project, which has been beset by delays, financing problems and questions about whether Europe really needs a rival to the US Global Positioning System, known as GPS.