In the late 1980s, still before the launch of ERS-1 with ATSR onboard, ESA obtained approval from member states for the follow-on mission, ERS-2. This was to have an identical payload to that of ERS-1, except that there was to be a new Announcement of Opportunity for the nationally provided instruments.
The ATSR-1 consortium duly proposed to provide ATSR-2. Funding was made available through an increase in funding to the UK Research Councils awarded in that year's national budget, in response to an earlier bid from the Research Councils for funds explicitly to develop Earth Observation instruments to address new problems relating to the global environment and climate. As with ATSR-1, additional funding was provided by Australia.
ATSR-2 was designed to build on ATSR-1 with the addition of three visible and near infrared channels at wavelengths suited to land applications. These channels were added with the objective of applying the two-angle view to the problem of generating an atmospheric correction when making quantitative measurements of land-cover parameters, such as vegetation indices.