The new UK Space Agency (UKSA) will take over responsibility for government policy and the key budgets for space, according to ministers.
The agency, which comes into being on 1 April, will also represent Britain on space matters in all negotiations with international partners.
The UKSA's name, logo and remit were announced at a conference in London.
Its establishment should bring more coherence to space policy - something critics say has been missing for years.
In particular, it is hoped an executive agency that can champion British interests abroad will help an already successful space industry to grow still further.
"People in the UK are not aware of just how good Britain is both at space research and in terms of our space industry; [a space agency] is going to make people more aware of that," Lord Drayson, the minister for science and innovation, told BBC News.
"But in practical terms, it's going to make the decision-making by government in all aspects of space policy much more joined up, better co-ordinated - a single point within government which has responsibility for making sure that we get everything in alignment such that the space research we do, the space industry that we're building, fulfils its true potential."
British space policy and budgets have until now been devolved to a partnership of government departments and science funding councils. The UKSA will, step by step, assume control of these partners' monies (about £230m per year) and their management functions.
Ministers want more information on EO and satellite broadband
It will start in the areas related to Britain's membership of the European Space Agency (Esa), where most of the civil space budget is spent.
It will then extend to areas that engage with the EU, which has begun in recent years to develop major space projects of its own, such as the Galileo satellite-navigation system.
In addition to the UKSA announcement, the government says £24m will be put into an International Space Innovation Centre (ISIC) at Harwell in Oxfordshire, the site of a new Esa technical facility. This is in addition to £16m from industry.
Ministers say the ISIC will help establish hubs of excellence in the UK to:
• exploit the data generated by Earth Observation satellites, • use space data to understand and counter climate change and • advise on the security and resilience of space systems and services.
The announcements are part of the government's response to a major report produced last month by industry and academia on the future prospects for Britain in space.
The Space Innovation and Growth Strategy (Space-IGS) laid out a path it believed could take the UK from a position where it currently claims 6% of the global market in space products and services to 10%, by 2030, creating 100,000 new hi-tech jobs in the process.
Astronaut Tim Peake on the UK's new space agency
The government says it agrees with most of the Space-IGS recommendations, including developing a National Space Technology Strategy.
One key area of dissent however is the call to double UK spending on Esa programmes over the next decade. The Space-IGS wanted Britain to try to initiate and lead at least three missions between now and 2030.
Ministers say they cannot make such commitments in the current economic climate.
"We will require a compelling business case for each proposal or mission," said Lord Drayson.
The government says it also wants more information from industry on how satellite broadband services could be expanded, and on the feasibility of establishing a UK-based Earth observation (EO) programme.
At the moment, the UK buys Earth imagery acquired by foreign spacecraft. The Space-IGS said there was a case for the UK to have its own EO fleet.
Space-IGS chairman and Logica CEO Andy Green welcomed the government response to the report.
He conceded ministers would find the Esa funding issue difficult but hoped that as economic conditions improved, the question could be raised again.
"They've been swift, I think they've been serious; they've put a lot of effort into it," he told BBC News.
"But as I've said today, we really have to concentrate on making a reality of this - [it's a] big ambition to go from 6% to 10%, create 100,000 jobs. That will need investment from industry, investment from government; and we'll see how that goes as we go up to the next spending round."
The creation of a space agency is just the latest in a series of initiatives affecting British space interests.
In July last year, Esa finally opened a technical centre in the UK - the only one of the agency's major subscribers not to have such a showcase facility. It also appointed a British national, Major Tim Peake, to its astronaut corps in May.
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