Timekeeping plays a critical role in spacecraft navigation and will be especially important for future deep space missions.
The clock will be smaller, lighter with magnitudes more precise than any atomic clock flown in space before, NASA said.
The Deep Space Atomic Clock was developed by NASA's Jet Propulsion Laboratory in California.
Last month, JPL engineers monitored integration of the clock on to the Surrey Orbital Test Bed spacecraft, which will take it into the orbit later this year.
A navigation team then processes this information to determine the spacecraft's flight path and determine if any course corrections are required.
The clock enables "one-way" tracking, where the spacecraft does not need to send the signal back to Earth.
The tracking measurements could be taken onboard and processed with a spacecraft-based navigation system to determine the path and whether any manoeuvres are needed to stay on course, NASA said.
It will lighten the load on the antennas in NASA's Deep Space Network, allowing more spacecraft to be tracked with a single antenna.
The Deep Space Atomic Clock would also improve the precision and quantity of the radio data used by scientists for determining a planet's gravity field and probing its atmosphere.
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