Ministers and senior EU research officials meeting in Brussels on Monday gave the European Commission their green light to increase its offer in order to break a deadlock with Japan over who will host the project, the source said.
Participants in the $US10 billion International Thermonuclear Experimental Reactor (ITER) project are China, the European Union, Japan, Russia, South Korea and the United States.
The consortium has agreed that the host country or region is to pay $US2.5 billion towards the project, or 48 per cent of construction costs.
But a Japanese newspaper reported last month that Japan planned to offer an extra 100 billion yen ($US915 million) to ensure the project is hosted on home soil. Tokyo has not confirmed the report.
The EU, which is trying to host the project at the southern French town of Cadarache, near Marseille has reportedly won support from China and Russia, while Japan, South Korea and the United States appear to prefer the Japanese site, in the northern village of Rokkasho-mura.
The thorny issue is likely to surface during a meeting of experts from ITER participant countries in Vienna on Friday.
A confidential report issued in February and obtained by AFP found the French site technically superior to the Japanese -- encouraging the EU in its ambition to host the project.
The document emphasised the lower installation costs at Cadarache, as well as the lower seismic risk level.
Among those present at Monday's meeting were Irish Deputy Prime Minster Mary Harney, whose country holds the rotating EU presidency until the end of the month, and the EU Research Commissioner Philippe Busquin.
It was also attended by French Research Minister Francois d'Aubert, his Italian counterpart Letizia Moratti, and the scientific adviser to British Prime Minister Tony Blair, David King.