The study suggests it is the brain and not the ear that "zooms in" on sound, acting like a radio by tuning into certain noises while ignoring everything else.
According to scientists, the new study could help explain why people with hearing difficulties lose this ability and are swamped by background noise.
This so-called "cocktail party problem" is especially acute for people with hearing aids and cochlear implants.
"We are only just beginning to appreciate the role the brain and this research gives us hope for improving not just the performance of implants and hearing aids, but the lives of people with hearing disabilities everywhere," the Telegraph quoted Vivienne Michael, the chief executive of Deafness Research UK whose scientists are carrying out the study, as saying.
Researchers at the University College London Ear Institute are using various techniques to investigate the issue including psycho-physics- the study of the sensations, neurophysiology, the study of the nervous system and brain scanning.
They are aiming to find out why some people are better able to zone out background and concentrate in the noisiest environments.
Finding the brain pathways behind this ability could help in repairing the ability in deaf people, said the researchers.
Research has shown it is particularly those with only one functional ear who are more disturbed by interfering noise.
It is believed the auditory system in the brain mix and match sounds from different ears and then filter out the unwanted noise.
"Scientists are particularly interested in how the central auditory system is able to cope with noisy environments, a major challenge for hearing research over the next decade will be to improve the performance of cochlear implant devices," said Michael.
"Bionic hearing provides a remarkable chance for the deaf to hear, sometimes for the very first time.
"Implant users struggle to pick up speech in noisy environments such as pubs and city streets. Future research in this field should aim to understand how to match the electronic signals of a cochlear implant with the brain's requirements for listening in noise," added Michael.