credit: DLR / caption: DLR's Phoenix demonstrator is dropped over Sweden's NEAT test range
While RLVs have featured as a part of ESA's Future Launcher Preparatory Programme I have personally never believed that a mini-Space Shuttle would be the outcome. Even the Russians with all their experience have never even put the flyback booster Baikal into operation - and that is just for a partially reusable system
Yet studies planned by ESA indicate a readiness to spend hundreds of thousands of euros on technologies that can only be for horizontal landing RLVs
In the meantime ESA is planning for its Intermediate Experimental Vehicle (IXV) to be launched by its new Vega rocket around 2010. Its objectives are to be a reentry system demonstration, technology experimentation and technology validation
But it will not land like the Shuttle, the IXV will either land by parachute in the sea or using airbags on land in Sweden's NEAT test range.
And linked to this flight test is an "advanced reentry flying qualities analysis" that will be benchmarked against the IXV flight.
I am only aware of the German Aerospace Center actually carrying out a spaceplane automatic landing demonstrator with its Phoenix vehicle at NEAT. The Japan Aerospace Exploration Agency did something similar with its High Speed Flight Demonstration vehicle with the help of French space agency CNES, also over NEAT
But now ESA seems to be preparing for RLV work with plans for at least two research projects whose documentation states that "this activity is currently in the [General Studies programmes] work plan but will only be implemented after confirmation of financial support from delegations. At that time a planned quarter for tender issue will be confirmed and bidders will be able to express their interest in the activity."
Those delegations are likely to be for ESA's member states' ministerial meeting in November when the governments finalise what they are prepared to fund for the next few years
The two existing projects, with this note attached, both have budgets in excess of €500,000 and they are "Avionics architecture for future reusable space transportation systems" and "Integrated vehicle health management system demonstrator"
Another two potentially RLV related ESA projects, without the financial 'disclaimer', are called "habitation requirements", examining man-rated spacecraft rules, and "window design for manned spacecraft," which is pretty obvious
As for what really will transpire in the years to come, my money is on further work for what is being called the Ariane 5 "Mid-life Evolution"
This is to enhance this commercailly operating rocket's performance, perhaps to 12,000kg to geostationary orbit and improvements to its upstream manufacturing and assembly processes for the launcher

Rob,
These activities have all been "in the pipeline", in some form or another, for more than a decade. Their aim seems to be to retain a minimum level of RLV design capability in Europe -- something that has been fading away ever since the demise of FESTIP.
My understanding from a few years back was that this sort of technology demonstration work was going to be coordinated through FLPP (wasn't there supposed to be a joint venture company, also) but, from what you say, it looks like even this has proved difficult.
Personally, I'd be far more encouraged if ESA were to set up some sort of initiative to encourage European versions of XCOR or Armadillo. A promise to purchase large numbers of reusable sounding rocket flights would, I believe, be much more effective than funding these sorts of efforts... though funding both would be even better!
You're probably right "capability retention" is the real reason for these sorts of studies. Lots of the whacky US stuff is basically to ensure the skills base is there for future needs, not because the US wants or needs an Aurora (calm down you in the back there!), or even a Blackswift.
On the joint venture company you mentioned, that is Next Generation Launcher aka NGL Prime, led by the very personable Axel Roenneke. Its creation, rather like Galileo, was marred by petty national politics and so rather than a big press conference it crept into existence.
Here is the ESA press annuoncement about the contract signing with NGL Prime
http://www.esa.int/esaMI/industry_kourou/SEMBU69OY2F_0.html
And here is my story about when NGL Prime's 'launch' was actually expected to happen about a year earlier
http://www.flightglobal.com/articles/2006/05/09/206442/europe-to-unveil-launcher-developer-at-berlin.html
I agree on the need for a European mechanism for creating the likes of Xcors and Armadillos. I think through NASA, DARPA and AFRL and their common SBIR system the US has a great way of encouraging innovation in small companies that bring to the fore technologies that can't be killed by the 'not invented here' syndrome or other management cultures that exist in big corporations.
If the EU does one good thing it should get the European Defence Agency and ESA to do just that. Its better than giving money to cows. I did once suggest to an ESA official that they should give the likes of EADS and Thales a set time frame within which they have to commercially exploit technologies developed through ESA contracts and if they dont the technology should be open to others to exploit.
Looking for contact information for Axel Roenneke. I worked with him at BMW Rolls Royce in the mid 90's and would like to re-stablish contact. Any help would be appreciated.
He's now working for MT Aerospace