The Canadian Arrow's crew cabin separates from the nosecone shroud, just before rocket engine burnout in this artist's depiction. CREDIT: Canadian Arrow.

A Canadian team of rocketeers has moved one step closer to launching its own manned spacecraft with the successful parachute drop test of a crew capsule today.

The backers of Canadian Arrow, a rocket entry in the $10 million Ansari X Prize competition, watched happily as their crew compartment drifted down into Lake Ontario.

"Today totally proves our Canadian Arrow design," said Geoff Sheerin, leader of the London, Ontario-based Arrow's bid for the X Prize. "It went really well and everything worked as it should."

Sheerin's group is one of more than two dozen teams competing for the X Prize, an international competition to build and fly a reusable three-person spacecraft twice in two weeks. Competing spacecraft must to reach an altitude of at least 62 miles (100 kilometers) above Earth to qualify for the $10 million purse and X Prize trophy.

Sheerin said his group is now about $2 million in funding away from putting Canadian Arrow on the launch pad. The group has spent about $5 million from sponsors and volunteers -- including man-hours -- to develop their vehicle, he added.

"We're still looking for a title sponsor," Sheerin said.

A nice drop

A helicopter dropped the crew capsule, equipped with instruments and cameras, from an altitude of about 9,000 feet (2,743 meters) about two miles (3 kilometers) offshore in Lake Ontario at about 9:00 a.m. EDT (1300 GMT).

Shortly afterward, the crew compartment let loose its 64-foot (9.1-meter) parachute and slowed its descent. It took between six and seven minutes to reach the water.

"The parachute came out fine and there was no swaying," Sheerin told SPACE.com after the drop test.

Arrow designers were concerned the compartment would tumble during descent and possibly tangle itself in the parachute lines. But while that concern was allayed, there was a brief moment when the capsule's parachute caught on an unexpected patch of air.

"It hit a section of air and started moving toward the shore," Sheerin said. "But after a few moments, it began to head back out again."

A team of London-based divers greeted the Arrow's crew compartment, and prepared it to be towed back to the National Yacht Club.

Flight tests ahead

The successful drop tests paves the way for a series of flight tests for Canadian Arrow in upcoming months, starting with a launch pad abort and leading up to an eventual manned launch, team members said.

The first abort test is designed to prove its escape system, which uses rockets to pull the crew compartment clear of its booster during a launch pad emergency. Other flights include an abort at about 30,000 feet (9,144 meters) with both crew capsule and booster, and a high-altitude abort test that would reach space.

"I think we can do all that in the next four or five months," Sheerin said.

Since Canadian Arrow is designed to launch off a barge, team members are scouting areas around the Great Lakes region, specifically Lake Huron and Georgia Bay regions, as potential launch sites for powered flights.

Meanwhile, Canadian Arrow's astronaut team has been hard at work writing a training program that they, and hopefully passengers, will use to prepare for suborbital flights, Sheerin said.

The team is also shifting its London-based space center into a new facility built specifically for the Canadian Arrow effort.

"This test isn't over yet," Sheerin said of today's drop test. "We still have to show we can dry these parachutes and pack them under two weeks."