A Swedish firm has become the first known foreign company to use Russian positioning technology Glonass, in a sign that the system could become a credible challenge to established U.S. rival GPS.

Sweden's Swepos, a national network of satellite reference stations, which provides data for real-time positioning with meter accuracy, said Glonass was better than GPS at northern latitudes.

"It functions somewhat better at northern latitudes because its satellite orbits are located higher in the sky and we see them better than we do the GPS satellites," said Bo Jonsson, deputy head of a geodesic research unit at Swepos.

Prime Minister Vladimir Putin's pet project, Russia has been developing Glonass since 1976, spending $2 billion on it over the last decade.

Russia still has three satellites to launch in order to complete the satellite network.

The project suffered a major embarrassing setback last year when three of the satellites plunged into the Pacific Ocean after a rocket launch went wrong, raising questions over the system's future.

The head of the Federal Space Agency, Anatoly Perminov, whose deputy lost his job after the rocket crash, told Putin at a meeting on the future of the Russian space industry last week that the Swepos' decision confirmed Glonass' viability.

"Sweden has moved to using Glonass. Why? Because in northern countries Glonass has an advantage over GPS. The Americans themselves will be forced to use it at northern latitudes," he said.

Swepos' Jonsson said 90 percent of their clients were using Glonass in combination with GPS. Deputy Prime Minister Sergei Ivanov, who oversees Glonass development, visited the firm earlier this month.

Putin will also visit Sweden later this month, where he is expected to promote the system. Russia hopes the success of the system will spark a domestic technology revolution as services develop around Glonass. The first smartphone using Glonass technology, operated by Mobile TeleSystems, went on sale this month.

Russia plans to introduce duties of about 25 percent by 2012 on the import of mobile phones without the Glonass navigation system as part of efforts to encourage worldwide adoption of the technology.

In August, Glonass' state operator said firms such as Nokia, Motorola and Qualcomm were in talks with Russian chip manufacturers about the mass production of handheld devices enabled with both Glonass and GPS.