(Adds Merkel quotes, background)
PARIS, June 11 (Reuters) - Countries involved in Airbus's project to build the A400M military transport aircraft need a further six months to discuss how to proceed, French President Nicolas Sarkozy said on Thursday.
Seven NATO allies involved in the much-delayed project had previously given themselves a three-month moratorium, due to expire at the end of June, to discuss the A400M's future.
Following talks with German Chancellor Angela Merkel, Sarkozy told reporters more time was needed.
"We said we'd give ourselves a little delay of six months to continue to discuss the best solution," he said.
Merkel said she was "in complete agreement" with this.
"We will give ourselves a few months and we will see when we can deliver such an airplane," she told reporters.
Belgium, Britain, France, Germany, Luxembourg, Spain, and Turkey ordered the A400M in 2003 in a deal worth 20 billion euros ($28 billion) -- the region's biggest single cross-border procurement contract.
But the programme has run into engine development delays, prompting Airbus parent EADS to halt production and call for talks with buyers on revisions to the contract.
The delays could cost EADS billions of euros in charges.
Germany's defence ministry has threatened to withdraw from the project, but Der Spiegel has reported that Merkel has distanced herself from this position.
The German chancellor said on Thursday: "In any case, we need a transport plane". (Reporting by Anna Willard; Writing by Crispian Balmer; Editing by Dan Lalor)