UK ministers are setting aside £92m to study the feasibility of building a sovereign satellite-navigation system.
The new network would be an alternative to the Europe Union's Galileo project, in which Britain looks set to lose key roles as a result of Brexit.
The UK Space Agency will lead the technical assessment.
Officials will engage British industry to spec a potential design, its engineering requirements, schedule and likely cost.
The first contracts for this study work could be issued as early as October.
The UKSA expects the assessment to take about a year and a half.
Ministers could then decide if they really want to proceed with a venture that will have a price tag in the billions.
Seeking a deal
London and Brussels are still negotiating Britain's future participation in Galileo.
The parties are currently in dispute over the UK's access, and industrial contribution, to the system's Public Regulated Service (PRS) beyond March of next year.
PRS is a special navigation and timing signal intended for use by government agencies, the armed forces and emergency responders. Expected to come online in 2020, it is designed to be available and robust even in times of crisis.
Brussels says London cannot immediately have access to PRS when the UK leaves the European bloc because it will become a foreign entity. London says PRS is vital to its military and security interests and warns that if it cannot use and work on the signal then it will walk away from Galileo in its entirety.
The Prime Minister Theresa May, presently on a tour of Africa, told the BBC it was, "not an idle threat to achieve our negotiating objectives". The UK did not want to be simply an "end user" and needed full access to Galileo if it was to continue to contribute to the system, she added.
Europe's Galileo system
- A project of the European Commission and the European Space Agency
- 24 satellites constitute a full system but it will have six spares in orbit also
- 26 spacecraft are in orbit today; the figure of 30 is likely to be reached in 2021
- Original budget was 3bn euros but will now cost more than three times that
- Works alongside the US GPS, Chinese Beidou and Russian Glonass systems
- Promises eventual real-time positioning down to a metre or less
'Best of British'
The UK as an EU member state has so far invested £1.2bn in Galileo, helping to build the satellites, to operate them in orbit, and to define important aspects of the system's encryption, including for PRS itself.
"Due to the European Commission post-Brexit rules imposed on UK companies, Airbus Defence and Space Ltd was not able to compete for the Galileo work we had undertaken for over the last decade," Colin Paynter, MD of Airbus DS in the UK, said.
"We therefore very much welcome the UK Space Agency's announcement today which we believe will allow Airbus along with other affected UK companies to bring together an alliance of the Best of British to produce innovative solutions for a possible future UK navigation system."
Analysis - Could the UK go it alone?
Few people doubt Britain is capable of developing its own satellite-navigation system. But the task would not be straight-forward. Here are just four issues that will need to be addressed before ministers can sign off on such a major project:
COST: The initial estimate given for a sovereign system when first mooted was put in the region of £3bn-5bn. But major space infrastructure projects have a history of under-estimating complexities. Both GPS and Galileo cost far more - and took much longer - to build than anyone expected. In addition to the set-up cost, there are the annual running costs, which in the case of Galileo and GPS run into the hundreds of millions of euros/dollars. A sat-nav system needs long-term commitment from successive governments.
BENEFIT: Just the year-to-year financing for a sat-nav system would likely dwarf what the UK government currently spends on all other civil space activity - roughly £400m per year. The question is whether investments elsewhere, in either the space or military sectors, would bring greater returns, says Leicester University space and international relations expert Bleddyn Bowen: "We could spend this £100m [feasibility money] doubling what the government is giving to develop launcher capability in the UK, which is only £50m - it could make a real difference. You could also spend that money buying some imagery satellites for the MoD, which would transform their capabilities overnight."
SKILLS: Britain has a vibrant space sector. It has many of the necessary skills and technologies to build its own sat-nav system, but it does not have them all. Many of the components for Galileo satellites, for example, have single suppliers in Europe. If Britain cannot develop domestic supply chains for the parts it needs, there may be no alternative but to bring them in from the continent. Spending the project's budget in the EU-27 may not be politically acceptable given the state of current relations on Galileo.
FREQUENCIES: The UKSA says a British system would be compatible with America's GPS - and by extension with Galileo - because both these systems transmit their timing and navigation signals in the same part of the radio spectrum. This simplifies receivers and allows manufacturers to produce equipment that works with all available systems. This is the case for the chips in the latest smartphones, for instance. But America and the EU had a huge row in 2003 over frequency compatibility and the potential for interference. It was British engineers who eventually showed the two systems could very happily co-exist. They would have to do the same again for a UK sovereign network. Without international acceptance on the frequencies in use, no project could proceed.
Some analysts believe the most fruitful approach now for the UK would be to extend its space expertise and capabilities in areas not already covered by others - in space surveillance, or in secure space communications, for example. This would make Britain an even more compelling partner for all manner of projects, including Galileo.
Alexandra Stickings from the Royal United Services Institute for Defence and Security Studies said: "Working its way to a negotiated agreement on Galileo would allow the the UK to then focus its space budget and strategy to build UK capabilities and grow the things we're able to offer as an international partner."