University research facilities will receive an extra £100m of public funding which the Government hopes will bring in a further £200m from the private sector and charities.
Research projects that could boost the economy are being targeted in the scheme to foster co-funding between the Government, private companies and research charities, said the Department for Business, Innovation and Skills.
The cash injection of "new" money was described as "extremely good news for students, universities and business" by professor Eric Thomas, president of Universities UK and vice-chancellor of the University of Bristol.
But Sir Paul Nurse, president of the Royal Society, said the measure is merely the first step in a series of necessary initiatives.
He said: "These things are very welcome but on their own they are only green shoots. The Government and industry still invest a smaller percentage of our GDP in research and development than our competitor economies; and while that remains the case we will not fulfil the Chancellor's goal of making the UK into Europe's technology centre."