A flagship US space observatory designed as a powerful successor to the Hubble space telescope needs another $1.5-billion (R10.53-billion) to make a launch date in 2015, an oversight panel reported this week.

About $250-million would need to be added to the James Webb space telescope project in Nasa's current budget, which agency associate administrator Chris Scolese said was unlikely.

"I doubt that we're going to find $250-million," Scolese said.

In a best-case scenario, the review panel pegged the telescope's overall cost at $6.5-billion, up from a $5-billion estimate two years ago.

That cost will grow even more if the launch date slips beyond September 2015.

The report, ordered by Senator Barbara Mikulski, a Maryland Democrat, determined that Nasa's cost estimates to develop the technologies and build the observatory were faulty from the beginning.

Scolese said the US space agency had brought in new management to oversee the telescope's development and clamp down on costs.

"We aren't in the business of cost overruns. We're not pleased we had a cost overrun. This is something we have to fix," Scolese said.

The review panel determined the telescope, a potential boon for astronomy, was in good shape technically.

"We've all seen the stunning results that have come out from Hubble," said astronomer and review panel member Garth Illingworth, with the University of California Observatories.

"The James Webb (space telescope) is a hugely more powerful facility than Hubble, 100 times more at least. The science just underpins so much of what we're looking to do in the future," he said.

Hubble, carried into orbit outside the distortion of Earth's atmosphere by a space shuttle in 1990, has been a vital research tool and has led to breakthroughs in astrophysics including imaging the first galaxies and determining expansion of the universe.

In a statement, Nasa administrator Charles Bolden said: "I am disappointed we have not maintained the level of cost control we strive to achieve - something the American taxpayer deserves in all of our projects."