Swindon is to have a campus offering degree and postgraduate programmes run by Bath University.
It will be based in the town centre with a second site at Oakfield School, where teaching is due to start in September 2000. Building work includes a community library and learning centre, and conference and concert hall.
In the next five years the campus will house 900 students, half of whom will be postgraduate, plus 80 researchers. Teaching programmes will be developed in collaboration with regional employers and research will be related to local industry, such as Honda, Intel and Motorola.
Sir Brian Fender, chief executive of the Higher Education Funding Council for England, said: "This announcement is a positive response to the lifelong learning agenda and recent initiatives to encourage universities to make their expertise more accessible to regional business and industry."
David VandeLinde, Bath vice-chancellor, said: "Much credit should go to Swindon Borough Council and the University for Swindon and Wiltshire Project for making this possible."
Swindon launched the University for Swindon and Wiltshire project several years ago. The 19th-century railway town also experimented with the idea of a virtual university in 1995.
Borough council leader Sue Bates said: "This is a significant step forward in achieving a local university in Swindon for the 21st century. It will increase access to higher education."