The system, known as Liberty, is among at least four contenders for the next phase of NASA's so-called Commercial Crew program, scheduled to be awarded this summer.

Since the retirement of the space shuttles last year, the United States is dependent on Russia to fly astronauts to the International Space Station, a $100 billion laboratory that circles about 240 miles above Earth. The fare is more than $60 million per person.

NASA hopes to buy rides instead from U.S. companies beginning in 2017.

The U.S. space agency currently is funding space taxi design work at four firms - Boeing, Space Exploration Technologies, Sierra Nevada Corp, and Blue Origin, a startup owned by Amazon.com founder Jeff Bezos.

NASA is reviewing bids for at least two, 21-month integrated design contracts, valued at $300 million to $500 million apiece.

ATK, which built the space shuttle booster rockets, teamed with Astrium, an EADS company that is one of the manufacturers of Europe's Ariane 5 rockets, to bid for NASA space taxi development funds last year but was not selected. The company continued to work on the project with its own funding, said Kent Rominger, a five-time shuttle astronaut who now serves as an ATK vice president and Liberty program manager.

ATK's new proposal adds a composite seven-person capsule, a launch escape system, propulsion module, avionics, an operations plan and other components for a complete space launch system.

Rominger said Liberty could be ready to fly crew to the station in 2015 for less than what Russia charges for rides in its Soyuz capsules.

The Liberty rocket's first stage would be an extended space shuttle booster rocket, a design originally developed under NASA's now-canceled Ares 1 rocket program.

Liberty's second-stage engine would be provided by Astrium. The newly announced capsule, also named Liberty, is a composite spaceship developed by NASA as a potential alternative to the Orion deep-space capsule.

Lockheed Martin, NASA's prime contractor for Orion, is a partner in the Liberty program. ATK was on NASA's design team for the composite alternative.

“"As a taxpayer, I want to get the best value out of what I've invested into our government. For example, Ares 1 (rocket program) was canceled, so to now pick up where the government left off is a very smart thing to do. It brings us the best value as a nation," Rominger told Reuters.

Liberty would fly from one of the space shuttle launch pads at the Kennedy Space Center in Florida. Depending on funding, test flights could begin in 2014.

Rominger said the capsules, which would parachute to a water landing, are designed to fly up to 10 times.

In addition to carrying seven astronauts, the rocket and capsule could carry cargo to and from the space station, as well as be used for satellite launches and other missions.

Rominger declined to say how much ATK and its partners have spent developing the Liberty system so far.

(Reporting By Irene Klotz; Editing by Eric Walsh)

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