An innovative UK launcher concept is to get 1m euros (£900,000) of investment from the European Space Agency (Esa).
The Skylon spaceplane would take off from a conventional aircraft runway, carry over 12 tonnes to orbit and then return to land on the same runway.
The money will help prove the vehicle's core technologies, including its Sabre air-breathing rocket engine.
Reaction Engines, the company behind the project, believes its reusable launcher could fly within 10 years.
Alan Bond, the Oxfordshire firm's managing director, said: "Traditional throw-away rockets costing more than a $100m per launch are a drag on the growth of this market.
"The Holy Grail to transform the economics of getting into space is to use a truly reusable space-plane capable of taking off from an airport and climbing directly into space, delivering its satellite payload and automatically returning safely to Earth."
The Skylon concept's key enabling technology is its Sabre propulsion system.
It is part jet engine, part rocket engine. It burns hydrogen and oxygen to provide thrust - but in the lower atmosphere this oxygen is taken from the atmosphere.
At high speeds, this requires Sabre be able to cope with 1,000-degree gasses entering its intake. These need to be cooled prior to being compressed and burnt with the hydrogen.
Reaction Engines' breakthrough is a remarkable heat exchanger pre-cooler.
Arrays of extremely fine piping plunge the hot intake gases to minus 130C in just 1/100th of a second.
The Esa money comes from the agency's technology development programmes and contributes to a total programme of investment in Skylon worth almost £6m.
It will enable Reaction Engines to build a full test pre-cooler at its facility at Culham.
Other aspects of the Skylon design will be investigated by EADS Astrium, the German space agency (DLR) and the University of Bristol.
Europe already has a very capable expendable rocket system in the Ariane 5, but Esa constantly has one eye on the future and the technologies that will provide the next generation of launch systems.
Guaranteed access to space for its member states is one of Esa's primary objectives, but lowering the cost of that access is also important.
The "brochure price" for an Ariane 5 is about 160m euros (£140m).
"People are looking for the technologies which are going to enable us to really transform the economics of putting stuff up into space," said UK science minister Lord Drayson.
"Britain is well placed here. The Skylon project is a good example; but I'd also point to Surrey Satellite Technology Limited with their microsatellites that are a fraction of the price of conventional satellites.
"We're in a promising position as a country to be working on those areas of technology that are applicable to the future of space research," he told BBC News.
Lord Drayson said the coming year was an exciting one for the UK as it finessed its policies in the light of an important review being undertaken into space activity and exploration.
The minister said it was possible a new structure - meaning a dedicated UK space agency - was needed to oversee this future.
"We need to ask ourselves, 'are we as well organised as we can be to make the best from this good position we've got?' We haven't made any decisions about this yet because I'm waiting for this review to come to me."