Supporters say the Berlin Palace, due to open its doors to the public in 2019 as a cultural centre, will restore the city's "old architectural balance" and they are hoping the German public will help to fund the restoration of its baroque facade through donations totalling 80 million euros.

The critics, however, say the project - first agreed in 2002 but only begun this summer - is an extravagant distraction from more pressing needs, for example public transport infrastructure, in the city of around four million people.

"This won't be an emperor's palace, rather a people's palace," Wilhelm von Boddien, head of the Association of Friends of the Berlin Palace, told Reuters, dismissing suggestions that rebuilding the palace is an elitist project.

Prussia's Hohenzollern dynasty used the 18th century baroque palace as its winter residence until the end of World War One when Germany's last emperor, Wilhelm II, was forced to abdicate.

It served as a museum under the Weimar Republic but was largely neglected by the Nazis.

Badly damaged in World War Two, the East German communists later demolished it to make way for a grand square and a new parliament building, the Palace of the Republic. That building was razed in 2008 after much heated debate.

Total costs for the reconstruction of the baroque palace have now jumped to 590 million euros from an initially planned 552 million, with federal state funds meeting most of the bill.

"Donations for the facade have already reached 21 million euros," Boddien said, adding he was confident that the public would meet the full costs of the facade.

The palace is one of several large construction projects currently underway in the German capital. A new airport is due to open next year after lengthy delays and Germany's foreign intelligence agency is also to get a spacious new headquarters.

Critics say the palace project points to poor prioritising in a country struggling to reduce public spending as it spearheads Europe's efforts to overcome the euro zone crisis and also in a city saddled with its own large debts.

"We have other investment and infrastructure problems in Berlin than the palace," architect Arno Paulus said.

"Most people in the construction business would confirm that the final costs of a building could be as much as 300 percent of the initial budget by the time the doors open to the public."

The new palace will house libraries, museum collections and space for research projects. It will be named the Humboldt Forum, after brothers Wilhelm and Alexander Humboldt. Wilhelm, a linguist and diplomat, founded Berlin's university in 1810 and Alexander was a famous explorer and naturalist. (Reporting By Jane Mwangi and Elisa Oddone, editing by Gareth Jones)

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