The SABRE engine is created to reach speeds above Mach 5 in the Earth's atmosphere, and will then be able to turn into a rocket that can fly through space at up to Mach 25.
Specialists at Reaction Engines say they have created a "pre-cooler", which worked at simulated speeds of Mach 3.3 - or 2,509 miles per hour to the laymen - meaning hypersonic travel could be on the horizon.
This technology could now be combined with the spaceplane's experimental engine, referred to as Sabre. Reaction Engines Ltd. designed the engine to take airliners around the world in few hours and drive space planes to orbit.
Oxford-based Reaction Engines has been working with the European Space Agency and the UK Space Agency, along with BAE Systems, to make the hypersonic plane, BBC reports.
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A spokesperson for Reaction Engines told MailOnline that although this technology is decades away from use in passenger jets, the technology could be used in more immediate applications.
"The significant testing milestone occurred at Reaction Engines" recently commissioned TF2 test facility located at the Colorado Air and Space Port, US.
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The pre-cooler is critical in the plane's development as it is required to stop the engine from melting by lowering the temperature of compressed air in the engine from more than 1000°C to room temperature in one-20th of a second.
There are three core elements to the Sabre engine; the pre-cooler, the engine core that has a a smart thermodynamic cycle to manage heat and fluid flow, and the thrust chamber situated at the rear. This is one of the reasons why jets can not travel too fast, as they engine is vulnerable to melting.
Before it blasts into space, the engine "breathes" air, like a normal jet - but has to compress the oxygen to 140 atmospheres to burn it along with the hydrogen fuel it carries.
The unique precooler has reportedly quenched a 420°C intake airflow successfully in less than 1/20 of a second.
Commenting, Mark Thomas, Chief Executive, Reaction Engines, said: "This is a hugely significant milestone which has seen Reaction Engines' proprietary precooler technology achieve unparalleled heat transfer performance". All the test objectives have been achieved by precooler heat exchanger in first phase of high-temperature testing.
At high speeds and at high altitude, it would transition to full rocket mode, combining the fuel with the oxygen carried inside.