British aerospace company BAE Systems unveiled an investment Monday in a new engine combining jet and rocket technologies that could allow passengers to fly from London to Sydney in four hours and New York in two.
The investment is part of a growing list of companies in the commercial space race.
BAE said it would invest £20.6 million (29.0 million euro, $31.9 million) for a 20 percent stake in Reaction Engines, which is developing the SABRE (Synergetic Air-Breathing Rocket Engine).
The company said that the engine's ability to "breathe" air from the atmosphere means it would be lighter and use less fuel than traditional rocket engines which have to carry their own oxygen.
Reaction says the technology would allow the launch of satellites into space at a fraction of the current cost and drastically cut travelling time.
The commercial space race is increasingly heated.
Two of the main contenders are SpaceX, which was the first private company to send cargo to the International Space Station, and Amazon.com founder Jeff Bezos's Blue Origin which plans to begin flights from Cape Canaveral, Florida later this decade.
BAE said in a statement that its investment would be used to develop a ground based engine as "a key milestone in the development of the technology".
SABRE would be able to accelerate on the runway from standstill to over five times the speed of sound once in the air and then transition to a rocket mode allowing spaceflight at around 25 times the speed of sound.
The investment, which is subject to approval by Reaction Engines' shareholders, follows a British government announcement it would fund £60 million.