It's still alive and kicking. I hope Skylon comes to fruition. A lot more funding required though.
Skylon is a design for a single-stage-to-orbit spaceplane by the British company Reaction Engines Limited (REL), using SABRE, a combined-cycle, air-breathing rocket propulsion system, potentially reusable for 200 flights. In paper studies, the cost per kilogram of payload carried to low earth orbit in this way is hoped to be reduced from the current £15,000/kg (as of 2011), including research and development, to around £650/kg, with costs expected to fall much more over time after initial expenditures have amortised. In 2004, the developer estimated the total lifetime cost of the programme to be about $12 billion.
REL themselves say: To demonstrate the application of SABRE engines to space access, REL has designed SKYLON, the first vehicle designed to be powered by SABRE engines.
SKYLON is an unpiloted, reusable spaceplane intended to provide reliable, responsive and cost effective access to space. Currently in early development phase, the vehicle will be capable of transporting 15 tonnes of cargo into space. It is the use of SABRE's combined air-breathing and rocket cycles that enables a vehicle that can take off from a runway, fly direct to earth orbit and return for a runway landing, just like an aircraft.
SKYLON will provide aircraft-like access to space to enable:
Operation from runway to orbit and back
Order of magnitude reduction in cost vs. existing technology
400 x improved reliability
Responsive access to space
The European Space Agency assessment concluded that:
"...the SKYLON vehicle can be realised given today's current technology and successful engine development."
European Space Agency Report, 2011
Because SKYLON is reusable (unlike current single-use space launchers) it can be purchased by companies and nations that want space access in a manner similar to current civil aircraft. As with aircraft, purchasing a vehicle will provide a much more cost effective option than trying to develop an independent launcher system.
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