The announcement comes after feasibility testing of essential technology conducted by the European Space Agency. The investment, through the United Kingdom Space Agency, will back technical improvements leading to construction of a prototype Synergistic Air-Breathing Rocket Engine, or SABRE, an ESA release said Tuesday.
Designed by British firm Reaction Engines Ltd, SABRE is designed to use atmospheric air in the early part of the flight before switching to rocket mode for the final ascent to orbit.
SABRE is intended to power a 275-foot-long pilot-less vehicle dubbed Skylon, performing the same orbital tasks as today's rockets while operating like an airplane.
The British investment decision follow the success of ESA-managed tests of a key element of the SABRE design, a precooler to chill the hot air entering the engine at hypersonic speed.
"The idea has been around since the 1950s but this is the first time anyone has managed to achieve a working system," Mark Ford, head of ESA's propulsion section, said. "Nobody else has this technology, so Europe has a real technological lead here."