Singapore Airlines is majority owned by the Singapore government through its investment fund Temasek Holdings. It previously held a 10 per cent stake in Virgin. The purchase still requires Foreign Investment Review Board approval becuase it would be a significant stake, but remains below the takeover threshold.

"Our partnership with Virgin Australia has been going from strength to strength, offering a wide range of consumer benefits," Singapore Airlines chief executive, Goh Choon Phong, said in a statement.

"Increasing our stake in Virgin Australia is another example of Singapore Airlines' deep commitment to the important Australian market. It also demonstrates our support for the ongoing transformation of Virgin Australia, which has created a more competitive aviation market in Australia."

Virgin Australia’s other shareholders include Air New Zealand, which has about 19 per cent of shares. And Etihad airlines has a 8 per cent stake. If the Singapore Airlines deal wins approval it would leave Virgin Group with about 13 per cent of shares.

Mr Branson recently sold his Virgin Money business in Australia to the Bank of Queensland for $40 million.

By Lucy Battersby