In its efforts to chronicle Britain’s constantly evolving landscape to the nearest centimetre, Ordnance Survey last year paid £700,000 for a little known aerospace company whose name – Astigan – derives from the Old English word for to rise or ascend.

The state-owned national mapping agency, which has its roots in attempts to keep Napoleon Bonaparte from these shores but has more recently been concentrating on the decidedly 21st-century world of big data, is reticent about just what Astigan is doing.

There are rumours that it is developing a space-age drone or dirigible, possibly solar-powered, to fly for days or weeks at a time to conduct aerial photography. The individuals behind the company, including the British pilot Brian Jones, who completed the first circumnavigation of the globe by hot air balloon, suggest these may yet prove to be true.

All OS would say yesterday is that its previously unpublicised acquisition is “researching new ways of remote data collection”.But the cutting-edge activities of one of Britain’s oldest and most venerable public institutions go to the heart of an increasingly vocal and bitter struggle over just what purpose OS serves, and complaints that it is stifling competition.

The European Commission is deciding whether to launch a formal inquiry into OS after businesses both competing with and supplying the agency filed a formal complaint that the Southampton-based organisation is in effect receiving illegal state aid.

Led by Getmapping, a successful aerial photography firm which is also one of OS’s suppliers, the complainants argue that lucrative contracts awarded to the mapping body by the Government allow it to make inflated profits. They claim these are then used to invest in new ventures and squeeze out smaller competitors.

Tristram Cary, chairman and founder of Getmapping, told The Independent: “There is simply not a level playing field when it comes to OS and its competitors. There are already many companies in the private sector doing the sort of work that Astigan is looking at and OS has no business putting its tax-payer-funded profits into projects which would give it a huge advantage. Our concern is that OS is in a monopoly position which threatens to kill off the private sector in this industry.”

Synonymous with the folding maps of Britain’s dells and shires beloved of generations of hikers, the OS of popular memory – its tweedy surveyors stalking the land armed with theodolites and cheese sandwiches – is long gone.

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The organisation now makes barely 5 per cent of its £144m annual revenues from its paper maps. Instead, the bulk of its income is derived from its MasterMap, a vast database held on banks of computers that detail every fixed physical object in the country down to the nearest centimetre. It is used to inform decisions on everything from sat-nav directions to Downing Street’s planning for the response to a terrorist atrocity.

Since 1999, OS has been designated a Trading Fund, a state-owned organisation whose revenues must come from providing its own goods and services. In the case of OS, this increasingly includes new products based on the gargantuan quantities of information held on the MasterMap.

At the heart of the complaint against it are two contracts granted by central government, the biggest of which is the Public Sector Mapping Agreement (PSMA), a 10-year deal signed in 2011 under which OS supplies mapping data to some 3,000 public organisations from Whitehall departments to parish councils in return for £60m a year.

The second, known as Open Data, is a requirement signed for a decade in 2010 for OS to make a substantial chunk of its vast quantities of information, from basic maps of the UK to postcode locations, available free of charge. In return OS receives a further £10m a year.

Critics argue that the result is that OS makes £70m a year from public funds while only returning £20m or so to the Exchequer as an annual dividend to its single shareholder: Her Majesty’s Government.

Mr Cary, who has seen previous legal complaints against OS rejected, said: “Our beef is that OS has been allowed to become far too big and is competing with British technology companies instead of, as they are supposed to do, promoting them. It is also hopelessly inefficient.”

The complainants, who say they have been told in Brussels that their case is “very strong”, say their argument is aided by a contract for aerial photography of the UK currently out for tender from OS which they say effectively replicates the work of another survey already being carried out by the Department for Environment, Food and Rural Affairs and 10 other departments or agencies.

Getmapping and another survey firm, Bluesky, have this week written to the Department for Business, Innovation and Skills (BIS) asking for the tender to be suspended.

Both OS and BIS declined to comment on either the letter or the European Commission complaint.

But the row will renew the debate about whether the mapping agency should be hived off and privatised or allowed to thrive as that increasingly rare of beasts, a world-class publicly owned asset.

Earlier this month, the Cabinet Office announced that it would be phasing out Trading Funds and placing them on a different commercial footing.

One industry source told The Independent: “The unpalatable truth for some here is that OS is extremely good at what it does and is admired worldwide. Privatisation raises a very important question about OS – its data is now the base material for a vast amount that goes on in this country. Are we saying we want that in private hands?”

OS strongly denied that it represents poor value for taxpayers’ money, pointing out that its dividend payments have increased from £5.8m in 2010 to £19.4m last year and that its data was shown to have produced public-sector savings of at least £46m last year.