Last month, more than 70 years since the dream of sustained hypersonic flight was first born out of Nazi designs for a manned bomber with a global reach, the US Air Force's latest experimental hypersonic aircraft was lost during an attempt to maintain Mach 6 for merely five minutes. Hypersonic (high supersonic) speeds are those greater than Mach 5, or 3,500mph.

During the 1960s, US engineers thought they had the prize in their sights with top-secret programmes such as Project Rheinberry, whose goal was to produce a rocket-powered Mach 17 air-launched reconnaissance aircraft for the CIA. But these projects never moved beyond the experimental stage.

Now, despite the crash of the unmanned X-51A Waverider last month, scientists from across the world, in an echo of the early days of jet flight, are in a series of experimental test flights racing to be the first to develop a propulsion system that will crack the secrets of sustained hypersonic flight.

This is about more than flying from London to Sydney in four hours, as the headline writers would have it. This is about space.

"So hypersonic travel may be the dream, but aircraft-like space access is the prize," Ben Gallagher says. Gallagher is business development manager for Oxfordshire-based Reaction Engines Ltd, whose revolutionary and privately financed Sabre (Synergistic Air-Breathing Rocket Engine) and Skylon spaceplane are Britain's champions in the hypersonic race. "And we are not talking Concorde frequency and cost, we are talking Ryanair. That's why it is now attracting more resources," Gallagher says, despite what he admits are the "massive engineering challenges" of flying at very high speed.

While even the Nazis' V2 rocket flew at hypersonic speeds, the challenge that today's engineers face is to develop a propulsion system and then an airframe that can sustain these very fast speeds for the much longer period of time necessary to fly into space or cruise to Sydney. The key to flying at hypersonic speeds for any length of time is the ability of an engine to manage the exponential jumps in temperature for small increases in speed beyond Mach 5.

Traditionally, engineers have looked to the air-breathing scramjet as the propulsion system to deliver such sustained hypersonic flight, as it can fly as fast as Mach 10 ( London to Sydney in two hours). It is also very lightweight, relying on its own high speed to suck air into the engine before it mixes with fuel oxygen and ignites: the hot gas forced out through the nozzle at the back then gives it propulsion.

However, a major disadvantage of scramjets is that they can start to operate only at Mach 4 or 5, so any scramjet space-plane would need one, two or even three other propulsion systems (often rockets) to get them up to near Mach 4, when the scramjet could take over. Managing these transitions is itself a huge technical challenge.

In contrast, the reusable Sabre engine alleviates the need for multiple stages as it can function as both a jet and a rocket engine. In its jet mode it can reach a speed of around Mach 5, sucking in oxygen from the atmosphere and using very lightweight pre-cooler heat exchangers to cool the air before it enters the engine, thus avoiding the problem of overheating and doubling the speed limits of existing jet-engine technology. The same engine then switches into rocket mode when it enters space, burning an on-board liquid-oxygen fuel supply. The European Space Agency found "no impediments" to the development of Skylon and its engines in a study published last year.

Sabre is a descendant of a British jet-meets-rocket project of the 1980s known as Hotol, which was abandoned because of cost. "Twenty years ago we were real voices in the wilderness and now we are being taken seriously," says Richard Varvill, technical director and chief designer of Reaction Engines, who worked on Hotol and whose revolutionary hypersonic engines are now being taken seriously enough to have led to "discussions with the world's leading aerospace companies". Varvill is one of three men who featured last night in The Three Rocketeers, a BBC Four documentary about Skylon. Any talk of contact from the British military is met with a firm "no comment".

"Airliners do captivate the public's imagination," Varvill says. "But hypersonic technology could lead to the birth of a whole new industry based around aircraft access to space. By cutting the cost of access from £150m a launch to £15m and ultimately down to £1-2m, we could dramatically increase the number of launches each year."

Ken Rock, a Nasa Hypersonic Project scientist, is more cautious about such a dramatic breakthrough, given that the technology is very challenging. Rock's scramjet-powered Hifire 2 achieved a speed of Mach 8 (9,800 km/h, or 6,000 mph) for 12 seconds in May this year. Hifire stands for Hypersonic International Flight Research Experimentation, a project whose goal is to develop the technologies necessary for practical hypersonic flight. "It's challenging because it needs advancements in a broad range of technologies, such as high-temperature materials and propulsive efficiency… to make it possible," he says. "We have the knowledge, but up to now there hasn't been the mission pull or demand to make this happen."

But now, like Gallagher and Varvill, Rock believes the world is changing. "The military see the very high speed, very long range and very short time to target of hypersonic missiles as a solution to some of the new threats they are facing" that may in turn provide the stepping stones necessary to develop the technology first to fly into space from any runway anywhere in the world and then for "hypersonic point-to-point travel" if the business case is more compelling by then.

Professor Russell Boyce, chair of the University of Queensland's Centre for Hypersonics and the director of Scramspace, an Australian government-funded project for a scramjet space-access system, is optimistic, as "there have been a lot of advances recently", but he accepts that "it is hard to design a vehicle that stays intact", owing to the unpredictability of airflows at these speeds. "Ground wind tunnels just aren't fast enough," he says. "It would take a huge amount of energy and facilities to test up to Mach 8 or 10." So there is no substitute for very expensive inflight testing.

Bill Sweetman, editor-in-chief of Defence Technology International, doesn't hold out much hope for a hypersonic airliner any time soon: "After all, we haven't even got a working supersonic one."

Hypersonic technology "has always been a technology looking for an application" and he believes that this is still true today, even though "there has been some revival in interest" from a US military worried by – for example – the new generation of long-range Russian F400 missiles. "There is not much with wrong with the technology, it's just for many jobs a simple rocket is good enough," Sweetman says. "The Sabre engine is an interesting idea as it doesn't depend on wacky physics or engines that can't be tested from end to end on the ground."

Ultimately, for Rock, while the crash of the scramjet Waverider does matter, as it was a hugely expensive accident, it "doesn't reflect our ability to understand the technology". Rather, in this "very risky research… you have to be willing to accept failures".

However, he acknowledges that Nasa is also interested in the more conventional Sabre engine and is watching developments closely.

No wonder then that Ben Gallagher is confident that "Britain is placed to have a technological breakthrough not seen for 70 years, since the days of Frank Whittle", the British inventor of the jet engine.