While construction of the first P.1127 had been going ahead at Kingston, Hawker had been making preparations at their Dunsfold airfield in Surrey for the flight test programme. Two dedicated facilities were built there, a ground running pen for testing the aircraft's engine, and a special grid for hovering trials. The latter was designed to duct away the exhaust of the Pegasus engine, eliminating adverse effects such as thrust losses due to re-ingestion of these hot gases. This was essential as the thrust of the engine was initially only adequate to lift the aircraft if all extraneous equipment (such as radios) was stripped out and with the aircraft carrying fuel for only a few minutes of flight.

Preparations continued at Dunsfold over the summer and autumn of 1960, with engine running trials and system tests conducted ahead of the initial set of hovering flights. The first of these finally took place on 21 October, with Bill Bedford at the controls. For this initial series of tests the aircraft was tethered to the grid with short cables to limit the height it could rise to. Limited by one-foot tethers, and with Bill Bedford's right leg in plaster following a car accident, the first hover was successfully completed. These tethers caused control problems of their own once their length was increased to four feet. The P.1127s reaction controls provided inadequate roll power to counter its tendency to rise with one wing low. When the tether on the high wing reached its limit it pulled the aircraft to one side, leading to the sight of the P.1127 'cavorting round like a drunken cow'. Various palliatives were tried, and once reasonable control was demonstrated the tethers were removed and free hovers could commence on 19 November.

XP831 hovering over the Dunsfold test grid, November 1960.	The modified reaction control system adopted after initial tests.

Once the first series of trials were complete XP831 was configured for conventional flight test. This involved replacing the radios, undercarriage doors and other items removed for the hovering trials, as well as the substitution of the bell-mouth inlet lips used for hovering with sharp, high-speed ones. Before conventional flight was attempted initial taxying tests had revealed serious deficiencies in the P.1127's undercarriage, with poor nosewheel steering, outrigger shimmy and mainwheel judder resulting in a broken main oleo. Although some of these problems were alleviated, it was to take several years to make the undercarriage work satisfactorily. Nevertheless, the first conventional flight took place from the long runway at RAE Bedford on 13 March 1961. This revealed a whole new set of problems - pitch-up, transonic wing drop, lack of directional stability with undercarriage or flaps down and various engine limitations to avoid flameout and surge. All of these were well-known development problems on other aircraft, and importantly none of them precluded moving on to the next stage of testing, transitions between vertical and conventional flight.

The approach taken by Hawker to the transitions was to work towards them in a series of stages. They were aided in this by the delivery to Dunsfold of the second P.1127, XP836, this aircraft first flying on 7 July. The second aircraft was used to extend the conventional flight envelope out to 538 knots, Mach 1.02 and 40,000 feet, as well as decelerating down to partially jet-borne flight at 95 knots. In the meantime, XP831 had commenced new hovering trials, helped by the engine being uprated to 12,000 lb. thrust. Nozzle vectoring, to add a component of forward speed, was gradually introduced, with speeds extending up to 95 knots. With the full speed range now demonstrated Bill Bedford performed the first complete transition on 12 September 1961, with Hugh Merewether also demonstrating Bedford's finding that such transitions were remarkably straightforward. The final key area to be explored was the short take-off. This was especially important for the potential service use of the P.1127 as it would allow a greater load of fuel and weapons to be carried compared to a vertical take-off. The first short take-off was carried out on 28 October at Dunsfold, the aircraft completing the latter stage of an accelerating transition once airborne. In the space of less than a year the P.1127 had shown that, despite the significant problems still to be ironed out, it was able to carry out the full range of operating profiles it was designed for.

Hawker were reassured by the fundamental success of their new aircraft, but fully understood that a great deal of work remained to be done to make the P.1127 a viable basis for a combat aircraft. They were rewarded for their efforts so far by an order from the MoA in late 1960 for a further four P.1127s, these being designated as a 'development batch'. Over time the P.1127s incorporated various modifications that resulted from the ongoing flight test programme. The first major change came as a result of the loss of XP836 on 14 December 1961 when the port front nozzle became detached, Bill Bedford successfully ejecting from the aircraft. Subsequent investigation showed that the glass-fibre construction of the nozzle was at fault, these nozzles henceforth being changed to steel construction. The first development batch aircraft, XP972, flew in April 1962, but was to serve only for a few months. Hugh Merewether was flying the aircraft on 30 October when the engine's main bearing failed. Although he managed to reach RAF Tangmere for a dead stick landing the aircraft was severely damaged and subsequently written off. The next two aircraft, XP976 and XP980, flew in July 1962 and February 1963 respectively. All the surviving aircraft eventually featured a number of modifications, including 'poor man's streamwise tips' on the wings (XP972 and XP980), anhedral tailplanes and enlarged fins to counter deficiencies encountered during flight test. At the same time, more powerful Pegasus 3 engines were introduced, as well as inflatable rubber inlet lips to try and achieve the required take-off performance. These were not a great success, tearing off during conventional flight, and were eventually replaced by compromise metal intakes on the final P.1127, XP984, which flew in February 1964, as well as on the Kestrels. XP984 featured a new, swept wing, stretched fuselage and Pegasus 5 engine and was to act as a prototype for the Kestrel service evaluation aircraft, nine of which were to be built over the next year.