Meanwhile, in 1946, the Air Ministry issued Specification F.43/46 for a daytime jet-powered interceptor. Camm took the basic P.1052 design and adopted it for the upcoming Rolls-Royce Avon turbojet. The Avon's major advantage over the Rolls-Royce Nene, used in the Sea Hawk, was the axial compressor, which resulted in a much smaller engine diameter and better thrust. In March 1948, the Air Ministry issued Specification F.3/48, to cover development of the project. Initially fitted with a single air intake in the nose and a T-tail, the project rapidly evolved to the more familiar shape. The intakes were moved to the wing roots, to make room for weapons and radar in the nose. A more conventional tail arrangement was devised, as a result of stability concerns. The project number should have been the P.1066, but as it would have undoubtedly been called the 'Hawker Hastings' and Handley-Page already had an aircraft with this name, Sydney Camm decided to retire the 1066 project number without it ever being used.
The P.1067 first flew from MoD Boscombe Down on 20 July 1951, powered by a 6,500 lbf (28.91 kN) Avon 103 engine from an English Electric Canberra bomber. The second prototype was fitted with production avionics, armament and a 7,550 lbf (33.58 kN) Avon 107 turbojet. It first flew on 5 May 1952. As a back-up, Hawker was asked to adapt the new fighter to another British axial turbojet. The third prototype with an 8,000 lbf (35.59 kN) Armstrong Siddeley Sapphire 101 flew on 30 November 1952. The two Avon-engined aircraft were duck-egg green in color, while the Sapphire prototype was speed silver.
The Ministry of Supply ordered the Hunter into production in March 1950, a year before the first flight. The first production Hunter F 1 with a 7,600 lbf (33.80 kN) Avon 113 turbojet flew on 16 March 1953. The first 20 aircraft were in effect a pre-production series and featured a number of 'one-off' modifications, such as blown flaps and area ruled fuselage. On 7 September 1953, a Hawker Hunter F.3 flown by Neville Duke broke the world air speed record, achieving 727.63 mph over Littlehampton . However, the record stood for less than three weeks before being broken by an RAF Supermarine Swift on 25 September 1953.