Having a national agency will not change the relationship with Esa
The new organisation is expected to have a budget and will represent the UK in all its dealings with international partners.
The announcement, made by the Science Minister Lord Drayson, follows a 12-week consultation held with academia, industry and government departments.
Britain spends about £270m a year on space, most of it via its membership of the European Space Agency (Esa).
But it also has a highly successful industry which currently contributes some £6.5bn a year to the UK economy.
“We have a real success story in our space research and space industry, and we need to make sure we make the most of it,” Lord Drayson told BBC News.