Construction could start next year and Branson said 40,000 people from 120 countries had already signed up to pay for private space rides that could start in 2009-2010.

New Mexico state will pay for the 225 million dollar base on 70 square kilometers (27 square miles) of desert land near the southern town of Las Cruces, the British group and the state government said in a statement.

"This is a historic day for our great state," said New Mexico governor Bill Richardson.

"With Virgin at the controls, enthusiasts from around the world will fly to space, routinely and safely, just a few years from now."

Branson said commercial space flights would start as soon as the base, which will be leased from the state government, is finished.

The company believes it will be able to ferry some 50,000 customers into space in its first 10 years.

Branson registered the Virgin Galactic name in 1999 but only announced plans this year to build aircraft to carry tourists into space.

The rockets will be based on the SpaceShipOne of designer Burt Rutan, which won the 10-million-dollar "X Prize" for sending a privately designed craft into space twice in two weeks.

Branson said the SpaceShipOne company, which is part financed by Microsoft co-founder Paul Allen, is now developing the eight-astronaut SpaceShipTwo for the commercial flights.

They plan to build five of the spacecraft, as well as a launch vehicle for them.

The prototype is expected to be finished next year and test flights are to start in 2008, Virgin said.

Tickets for the first flights are expected to cost about 200,000 dollars.

Among the 40,000 people who have signed up are actress Victoria Principal, the statement said. Virgin says it demands a 10 percent advance payment, which can be reclaimed if the passenger does not go on the flight.

The space passengers will get two days of weightlessness training before blasting off on the Virgin craft that will take them up 75 miles (120 kilometers).

"This is an opportunity of a lifetime and I can't wait to be one of the first Virgin Galactic customers into space," said "Dallas" actress Principal.

To promote the space program, in early December Virgin Airlines, another Branson company, announced it would offer frequent-flyer "Space Miles" that passengers can put towards flights in space with Virgin Galactic.

"There are already 30 people in the world who have collected enough air miles to fly into space," Branson said at the time.

"We do think there will be a lot of Virgin Atlantic people who will want to travel into space," he added.

Richardson, who is tipped as a possible Democratic presidential contender, said that according to economic studies, thousands of jobs would be created and hundreds of millions of dollars of revenue earned from Virgin.

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