In May 1951 requirement particulars for a rocket propelled fighter were circulated to Britain's Air Staff. Because of the limitations of the early warning system and the likely scale of enemy attack, it was thought that a large force of high performance day fighters would be required, their capabilities to exceed those of the fighters then being developed.

The original requirement called for a ramp-launched rocket powered fighter which would climb under power and glide back to land on a skid. Later the requirement added a conventional undercarriage and a jet engine. Saunders-Roe and Avro each won contracts to build prototypes for a evaluation, with Avro producing the Type 720 and SARO the SR.53.

Although the Avro 720 was ready to fly earlier than the SR.53, it was kept grounded because the RAF wanted both flying at the same time for evaluation. The government decided that for reasons of economy, one project or the other would have to be stopped. The Saunders-Roe aircraft was seen as likely to be more successful and would have an attractive performance in its developed form. The government withdrew funding from the Avro 720 after £1 million had been spent, leaving the SR.53 alone in the field.

There followed a number of setbacks, among which were problems in the fuel system design and development of the rocket engine. The aircraft suffered an explosion of its tail section during a rocket test in late 1955. Finally, the first SR.53, XD145, was rolled out in June 1956. The finished aircraft was 45 feet in length, with a wingspan of 25 ft. 1 in. It was fitted with dummy De Havilland Firestreak guided missiles on the wing tips to emphasise its fighter role.

The SR.53 was taken by road to RAE Boscombe Downs, and flew for the first time on 16th May, 1957, also appearing at that year's Farnborough Air Show.

The SR.177 design had been initiated in late 1953 as the ultimate derivative of the SR.53, then also in the preliminary design stage. The company designation was actually SR.53 and the specification number was F.155, both designations combining to give a project name of "SR.177".

The project was submitted to Britain's Ministry of Supply in 1954 as a land-based aircraft for the RAF. The Royal Navy became interested in March 1955 and a design development contract was awarded in September. This was followed by a contract in 1956 for six evaluation prototypes for the Royal Navy and RAF. There were no major differences between the two service types apart from an arrester hook and some local strengthening for catapult spools in the navy version.

The SR.177 was roughly similar to the SR.53. It had a Gyron Junior turbojet (8,000 lb st / 3630 kgp) in place of the Viper (1,750 lb st /794 kgp). The 8,000 lb (3630 kg) Spectre 5A rocket motor was common to both aircraft; but the relative positions of the jet and rocket motors were reversed, the turbojet being the lower power plant in the SR.177.
Owing to the far greater power of the Gyron Junior engine, the small dorsal intakes of the SR.53 were replaced by a large chin intake on the SR.177, topped by a radome for the A.1 radar.

In the SR.53, the rocket motor was intended for use during interception, the jet using the remaining fuel to return to base. The better fuel economy of the Gyron Junior in the SR.177 allowed full exploitation of the benefits of mixed power. The turbojet would be used for subsonic cruise up to Mach 0.95, at which stage the rocket would carry the aircraft to its maximum speed of about Mach 2.35.

The Spectre 5A was a bi-fuel motor burning kerosene and hydrogen peroxide, controllable from 10% to 100% power. It drew its primary fuel from the same tanks as the jet engine. Full power endurance was estimated at seven minutes.

In addition to its interceptor role, the SR.177 was also intended to perform strike, low-level reconnaissance and attack roles, purely on high subsonic speed using only its jet engine. Provision was ultimately to be made for in-flight refuelling and operation from short airstrips.

In July 1956, Treasury agreed to a development batch of 27 aircraft, but authorised the building of only 9 aircraft initially, delaying construction of the remaining 18 aircraft. The delay in Treasury approval being granted was due to reviews of patterns of fighter defences of the future, and the atmosphere of financial stringency and economy generally.

The SR-177 had still not flown; it was scheduled to make its first flight in April 1958, but this was thought likely to slip by six months. But in 1957 a Defence White Paper put an end to many British projects. It decreed that the English Electric Lightning would be the RAF's last manned fighter. This eliminated any chance of the SR.177 being ordered for the RAF, but the short-sighted paper did not affect the Royal Navy for whom, by then, the project was being primarily developed. Air Staff cancellation of OR337 (the December 1955 updated requirements for the project) was formally sent to the Ministry of Supply on the 29th March.

Shortly afterwards, it became evident that developing the aircraft to serve such a relatively small order would be uneconomical. Overseas interest in the aircraft failed to solidify into actual orders. Work on the six prototypes ended, and the government-backed SR.177 project was abandoned at the end of 1957.