(Adds security sources)

BERLIN, Feb 19 (Reuters) - The negotiations on the nextsteps in the development of a Franco-German fighter jet arestill going on, the government in Berlin said on Friday, whilesecurity sources described the talks on Europe's biggest defenceproject as stuck.

The battle over the Future Combat Air System (FCAS) with anestimated cost of more than 100 billion euros ($120.4 billion)has intensified since Spain officially joined the project latelast year.

The three countries still disagree over intellectualproperty rights and workshares, with French company Dassaultdemanding 50% of the workload, security sources toldReuters on Friday.

The disagreements run so deep, there are considerations bynow to build three demonstrators instead of one, further drivingup the cost of the project, they said.

The Berlin government refused to give any details on thestatus of the negotiations after the latest round of talks ofthe defence ministers of Germany and France on Thursday.

The government was still planning to send the budgetproposal for the next tranche of project payments to parliamentbefore general elections in September, a defence ministryspokesman in Berlin said.

On Wednesday, a meeting of defence officials from France,Germany and Spain, as well as Dassault, Airbus andIndra, failed to reach a breakthrough.

German Chancellor Angela Merkel and French PresidentEmmanuel Macron kicked off the ambitious venture in 2017, whenthe EU was rattled by Britain's decision to leave the bloc anddeeply divided over other issues such as the migrant crisis.

But it has become mired in mistrust and differing visionsbetween Berlin and Paris as well as corporate infighting overworkshare, according to insiders.

At the beginning of February, Merkel and Macron failed tosettle the issue, leaving open when the next tranche of paymentsof at least 5 billion euros can be released.(Reporting by Sabine Siebold, Editing by William Maclean andDavid Evans)