The European Union, whose bid is backed by Russia and China, has threatened to go it alone on the International Thermonuclear Experimental Reactorunless it seals a deal with Japan, which is supported by the United States and South Korea.

The project aims to emulate the sun's nuclear fusion to generate inexhaustible supplies of energy.

The eventual host of ITER was due to finance 50 percent of the construction cost, with the other five partners each covering 10 percent.

But Japan proposed to allocate 20 percent of the construction cost to European companies if Japan's bid won and to let the EU host an ITER headquarters with a European project chief, the Mainichi Shimbun reported.

The newspaper, quoting government sources, said the "drastic compromise" was offered by Japan in September, triggering a European counter-offer revealed in November.

The budget for ITER is projected to be 10 billion euros (13 billion dollars) over the next 30 years, including 4.7 billion euros to build the reactor.

The EU wants to build the reactor at Cadarache in southern France, while Japan has proposed its northern town of Rokkasho-mura for the facility which is not expected to generate energy before 2050.

The European Union has mulled a scenario of offering Japan a new international scientific computing centre as compensation if Japan did not host ITER.

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