Universities will soon be invited to bid for a share of the Pounds 25 million to set up eight Enterprise Institutes.
The Department of Trade and Industry said details would be available in December. The funds were "new money", a spokesman added.
Luke Georghiou, head of Manchester University's science and technology think tank Prest, welcomed the initiative. "Enterprise, especially in technology, is the key challenge for the UK economy."
Professor Georghiou said that the institute concept seemed to bear a strong resemblance to existing initiatives at Manchester. One, called Campus Ventures, is an "incubator" initiative that assists rapid transfer of laboratory research to the marketplace. Backed by sponsors, including Manchester Airport Ventures, British Nuclear Fuels and ICL, Campus Ventures has launched 28 companies in two years.
Another is Manchester's Centre for Enterprise in Higher Education, which aims to introduce entrepreneurial skills to undergraduates across disciplines.