In the early 1950s, the British Air Ministry, impressed by the performance of the rocket-powered Messerschmitt Me 163 fighter, and facing the potential threat of Soviet supersonic bombers armed with nuclear weapons, issued Specification F.124T for a rocket-powered point-defence interceptor. This was to be of similar concept to the Me 163, using its rocket to climb rapidly to meet its target, before gliding back to earth, fuel exhausted, to land on a retractable skid. Proposals to meet the specification were received from a number of companies, including Avro, Bristol, Blackburn, Shorts and Saunders-Roe. It was soon realised, however, that a rocket-only fighter with the performance required by the specification, which would have to glide back to ground from heights of up to 100,000 ft (30,500 m), land without power many miles away and then be recovered and taken back to the airfield by ground vehicle, was impracticable. Revised specifications were therefore issued to Avro and Saunders-Roe for aircraft with auxiliary turbojet engines, giving sufficient power to allow the aircraft to fly back to its airbase after combat.
Avro's design, the Avro Type 720, designed to meet specification F.173D, was a small tailless delta-winged aircraft. It was constructed of metal honeycomb sandwich. The main power-plant was an 8,000 lbf (36 kN) Armstrong Siddeley Screamer rocket engine, using liquid oxygen as oxidant and kerosine fuel. This differed from the competing Saunders-Roe SR.53, which used a de Havilland Spectre powered by Hydrogen Peroxide and kerosine. Both types used a 1,750 lbf (7.8 kN) Armstrong-Siddeley Viper as the auxiliary turbojet, with the Avro design fed with air from a small chin inlet under the aircraft's nose. Two de Havilland Firestreak Infrared homing air-to-air missiles could be carried on underwing pylons.
Two prototypes were ordered, and the Screamer engine successfully completed flight clearance tests in December 1956. Official concern about the practicality of using liquid oxygen, which boils at -183°C (90 K), in an operational environment led to the Screamer engine being cancelled late in 1956, together with the Avro 720. One structural test airframe was part complete at the time of cancellation, and photographs of this airframe, with the port wing fitted and the serial number XD696 painted on are sometimes claimed to be the "almost complete" first prototype. The Avro 720 had cost £1 Million by the time of cancellation, while its Screamer powerplant cost a further £0.65 million.