Aerospace company Thales Alenia Space are set to make a refuelling module for the Lunar Gateway, and they will use their bases in Bristol, Belfast and Oxfordshire to create the new station.
Science Minister, Amanda Solloway, said: "Creating the first ever space fuel station on British soil is yet another example of how we are leading the world in space innovation, especially as this incredible project will be vital for future exploration of the moon and Mars.
"I am delighted that this game-changing technology is going to be supporting nearly 200 high skilled jobs right here in the UK, increasing our standing as a global space power."
The station is launched full of propellant and will allow for the Lunar Gateway's orbit control systems to be refuelled on site. Once the station is empty, space tankers from Earth will travel up to refill the tanks.