The nation has been alone among the major industrialised nations in not having an executive body to direct its activities beyond the Earth’s surface.
The new organisation is expected to take control of the money spent on space by government departments and science funding agencies.
It will also represent the UK in all its dealings with international partners.
Britain currently puts about £270m a year into civil space endeavours, most of it via the UK’s membership of the European Space Agency (Esa).
This is not expected to change dramatically with the creation of an executive agency, especially with the government committed to cutting the public deficit.
The hope, however, is that the reorganisation will bring more coherence to space policy, enabling the available monies to be spent more effectively.
Space budget (SIGS)
In tandem with the establishment of the agency, the government will also give its response to a major report produced last month on the future of the UK space industry.
The sector has been very successful, growing at an average of 9% a year even through the recession. It currently generates revenues in excess of £6bn per annum.
The Space Innovation and Growth Strategy was prepared jointly by industry, academia and Whitehall officials. It set out a series of recommendations to grow the sector still further over the next 20 years.
Among its recommendations was a call to government and industry itself to raise substantially their levels of investment in the coming decade.
The IGS also wanted the government to back a National Space Technology Strategy and to investigate the idea of an indigenous Earth observation service.
The BBC understands the latter proposal at least will get a study to determine its feasibility.
The creation of a space agency is just the latest in a series of initiatives affecting British space interests.
In July last year, Esa finally opened a technical centre in Britain – the only one of its senior members not to have such a showcase facility. It also appointed a British national, Major Tim Peake, to its astronaut corps in May.