Chancellor George Osborne has increased spending on space technology by £60m per year over the next two years.
The government hopes this will attract more hi-tech jobs and contracts to Britain.
Overall spending in civil research has, however, declined by 5% in real terms since 2010 - a reduction which is set to continue.
Mr Osborne made the announcement in a speech to the Royal Society, calling for a national debate on where the UK can lead the world in scientific excellence.
The European Space Agency (Esa) investment will lift UK's contribution to the Paris-based organisation by an average of 30% at a time when many other nations are struggling to meet their contributions or even reducing them.
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