Britain could send its first un-manned mission to the moon by 2010 to study the lunar surface and find the best site for humans to inhabit, the BBC reported.
A report by Surrey Satellite Technology Ltd, a top British space company, found the cost of space travel had fallen enough to let the government consider such a probe, it said.
Britain's astronomy funding agency, the Particle Physics and Astronomy Research Council, was understood to be considering the idea, the broadcaster added.
"We are going to go to the moon in order to generate new business opportunities, science opportunities and develop technology," Surrey Satellite Chief Executive Martin Sweeting, who wrote the report, told BBC News late on Tuesday.
The idea would be to launch two forays to the moon.
The first, named "Moonlight", would fire four darts the size of suitcases onto the moon's surface from orbit to test for quakes, tremors and other data, the BBC said.
If the mission was successful, a second probe, "Moonraker" would be launched with the aim of landing on the moon.
"Moonraker" would search for sites where humans could live as part of a plan by NASA to build a permanently occupied lunar base there, with flights slated to begin in 2020, the BBC said.
Science minister Malcolm Wicks was upbeat about the idea, forecasting that outer space would have an increasingly important economic role for Britain.
"The benefits are enormous not only to science but actually to the economy and what we are going to see in this century is space and British space excellence increasingly becoming part of the British economy and things we are good at," he told the BBC.
Britain's space dreams suffered a blow in 2003 with the failure of the Beagle 2 mission to seek out life on Mars.