British multinational BAE Systems has bought a 20% stake in Reaction Engines - a firm that is developing radical new aircraft which could be propelled into space.

The deal is worth £20.6m (€29m) - Reaction hopes that its hybrid rocket and jet engine technology will allow passengers to fly anywhere in the world in four hours.

It could also launch satellites into space at a fraction of the current cost.

The British Government is also investing £60m in the company which is based in Oxfordshire.

Reaction Engines hopes to have a ground-based test engine working by the end of 2019 - and to begin testing unmanned flights by 2025.

The company describes this as a project which has the potential to, "revolutionise hypersonic flight and the economics of space access."

It says that this is a, "new class of aerospace engine is designed to enable aircraft to operate from standstill on the runway to speeds of over five times the speed of sound in the atmosphere."

"SABRE can then transition to a rocket mode of operation, allowing spaceflight at speeds up to orbital velocity, equivalent to twenty five times the speed of sound. Reaction Engines’ technology has undergone extensive independent technical assessments which have confirmed its viability and potential vehicle applications," it continues.

Today's investment has been received as a major vote of confidence in the project.