The SR.177 principally differed from the smaller SR.53 in its adoption of a nose-mounted aircraft interception radar unit, which allowed it to scan for and lock onto its own targets; a more powerful turbojet engine was also incorporated.

Most particularly, as with the German rocket-powered interceptors of the Second World War, the range and endurance of such an aircraft were limited by the high rate of fuel consumption by the rocket engine.

Out of a combined desire to equip the aircraft with a radar unit and to make greater use of turbojet power, a more ambitious design began to be drawn up.

[7] Of the changes made to the aircraft, major differences included the repositioning of the jet engine to the lower fuselage lobe, which was now fed with air via a large, chin-mounted intake; the wing was also enlarged and blown flaps were adopted.

[7] The Ministry also gave instruction for the production of mock-ups, windtunnel tests, and the development of construction jigs for the manufacture of an initial batch of aircraft.

[12] At this point, the project was viewed as having considerable large scale potential, as both the RAF and Royal Navy appeared to be set to be customers for the SR.177.

The RAF sought to operate it alongside the incoming English Electric Lightning interceptors while, according to aviation author Derek Wood, the Royal Navy also had considerable interest in the programme.

On 4 September 1956, a formal contract for the 27 aircraft was issued, which was sub-divided into four batches of five, four, four, and fourteen respectively, although the final eighteen were subject to evaluation and were thus pending confirmation.

[15] Since 1955, the revived German Air Force had sought a suitable high performance aircraft to equip itself with, and there were hopes that the SR.177 could become the foundation of a collaborative European fighter programme.

[15] The German Defence Ministry had first expressed interest in the SR.177 in October 1955; in February 1956, the British Government Committee on Security consented to discussions being held on the SR.177.

[17] In January 1957, the Anglo-German Standing Committee on Arms Supply reported that General Kammhuber, the Commander-in-Chief of the German Air Force, was concerned that, due to a lack of available financing until April 1958, the delivery timetable may not be satisfactory.

In September 1957, Aubrey Jones, the Minister of Supply, was keen to support the programme and had agreed to continue funding development of five of the six prototypes.

[20] However, according to Wood, the SR.177 was subject to political in-fighting between Aubrey Jones and Duncan Sandys, the minister who had been the prime advocate of the Defence White Paper.

This Lockheed coup, known as the "Deal of the Century", caused major political controversy in Europe and the West German Minister of Defence Franz Josef Strauss was almost forced to resign over the issue.

Due to ridiculous defence policies and a complete lack of Whitehall inter-departmental collaboration in the technology field, one of the most promising projects in a decade was destroyed".