'The government plans to make a decision before the New Year,' a spokesman, Lars Christiansson, said. Mr Bildt's office said he would meet the Danish Prime Minister, Poul Nyrup Rasmussen, in Copenhagen tomorrow to discuss the matter further.
The project would realise a century-old dream of linking Sweden and Denmark across the Oresund Strait and be the first fixed link between Scandinavia and continental Europe.
But the decision could threaten Mr Bildt's minority centre-right government. A decision to go ahead could prompt the Centre Party, which opposes the link on environmental grounds, to leave the four-party coalition government.
The Environment Minister, Olof Johansson, caused shock waves in June when he said the bridge would not be built if it were up to his Centre Party. Environmentalists have expressed concern that the bridge could cause traffic pollution and slow the water flow in the strait.
Plans already approved by the parliaments in both countries call for the link to run between Malmo in southern Sweden close to the Danish capital of Copenhagen by the year 2000. It would start on the Danish side with a 3km tunnel running to a 4km-long artificial island and then to an 8km bridge.
The link, among the longest in the world, would carry a four-lane motorway and passenger trains capable of 200km an hour (130mph) connecting with Europe's high-speed train network. The cost is estimated at 12bn Swedish crowns ( pounds 940m).
'The Oresund bridge is the biggest threat facing the government in the past few years,' said a political analyst, Anders Sannerstedt, of Lund University. 'I think the government will say 'yes' to the bridge and the Centre Party will say 'no'.' Mr Sannerstedt thought the Centre Party would stay in the government but if it left the government would probably resign and Mr Bildt would be appointed again and set up a three-party coalition.
Mr Bildt favours the link and is anxious not to renege on a binding agreement with Denmark, which has begun construction on the Danish side.
Sweden has been consulting various groups on the desirability of the project. The last consulted, the country's Water Tribunal, has agreed to the link, provided it does not lead to changes in water flows and sediment movement is limited.
The Oresund Consortium, owned by the Danish and Swedish governments, which is in charge of the project, has already selected international consulting engineers to act as consultants for the design.
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