PAUL ALLEN, co-founder of Microsoft, is heading for outer space.

The US Federal Aviation Authority (FAA) yesterday confirmed that a company backed by Mr Allen — co-founder of Microsoft with Bill Gates — had applied for a licence to send a manned rocket some 60 miles above Earth, which is considered the edge of space.

Mr Allen has lent financial muscle to Scaled Composites, a small company in Mojave, California, that has developed a craft to compete in the “X Prize”, which pays $10 million (£5.4 million) to the aircraft chosen for the first privately funded manned space flight.

Scaled Composite’s ship, SpaceShipOne, is the brainchild of Burt Rutan, the company’s founder, who designed Voyager, the first aircraft to fly non-stop around the world in 1986.

The X Prize was launched in 1996 by Peter Diamandis in an attempt to kick-start the space tourism industry. To win it, a craft capable of holding three people must fly to an altitude of 62.5 miles above the Earth, twice within two weeks.

Scaled Composites is one of two US companies competing in the X Prize. The other is Armadillo Aerospace of Mesquite, Texas. Both have applied for an FAA licence to fly into space. The FAA said that it was “very close” to granting licences to both.