South Africa is well-placed to host the world's largest telescope because the costs would be lower, according to the deputy science minister.

South Africa is competing with Australia to win the contract for the Square Kilometre Array (SKA), a multi-billion dollar instrument that will be 50 times more sensitive than today's most powerful radio telescopes.

The bid will be decided by February or March next year, but the global economic crisis might give South Africa an advantage, said deputy science minister Derek Hanekom on a flight to the Karoo, a semi-desert region in the remote Northern Cape province Monday night.

"The cost will probably escalate to two billion dollars" and funding countries are finding their budgets stretched, he told journalists.

"It's a big one, so that's why South Africa is a good place."

If South Africa wins the bidding, engineers will connect antennas in the arid Karoo region by remote link to a network of dishes stretching across southern and eastern Africa and as far away as Ghana.

Australia's bid puts the core site at Mileura station, about 100 kilometres (60 miles) west of Meekathara in western Australia. Other antennas would be distributed across Australia and New Zealand.

The SKA steering committee, which represents a consortium of 17 countries involved in the project, is expected to make the final decision.

But cheaper labour, construction and electricity also gave South Africa the country an advantage over Australia, said Justin Jonas, the engineer and astronomer who heads the project in the country.

"To go on site is also cheaper, you need just one hour to fly there (from Cape Town)."

Scientists hope the SKA, a massive new radio telescope linking 3,000 antenna dishes, will shed new light on fundamental questions about the universe, including how it began, why it's expanding and whether it contains life beyond our planet.

South Africa has the largest optical telescope in the southern hemisphere near Sutherland, a town in the southwest of the country.

Its northwestern neighbour Namibia has the High Energy Stereoscopic System, the biggest cosmic ray telescope in the world, 100 kilometres (60 miles) south of the capital, Windhoek.

"SA has pretty much ideal conditions for astronomy," said Hanekom.