A new £1 million prize will stimulate a "new generation of engineering genius", David Cameron said.
The Queen Elizabeth Prize for Engineering will be awarded every two years for a "groundbreaking advance in engineering which has led to significant international public benefit".
Speaking at its launch, the Prime Minister said the UK did not do enough to recognise engineering.
"In so many ways that is absurd because this is the country that gave birth to the industrial revolution," he said.
In a rare show of cross-party unity, Mr Cameron was joined by Labour leader Ed Miliband and Deputy Prime Minister Nick Clegg at the Science Museum event.
Mr Cameron said the prize, which will first be awarded in December 2013 and is open to all nationalities, would raise the status of engineering in the UK.
"We are here because we believe in the inventiveness and the genius of the British people.
"We want young people leaving school today to see engineering as the exciting, dynamic profession that it is.
"In many ways engineers are the real revolutionaries, the ones who take society forward."
The Royal Academy of Engineering will deliver the accolade, which will be overseen by a charitable trust headed by former BP chief executive Lord Browne.
It is hoped the £1 million award, the world's richest for engineering, will rival the status of the Nobel prizes.
Lord Browne said: "I believe this prize can get engineering back in to the heart of society."