A new Science and Innovation Agency should replace the Office of Science and Technology, according to a report published this week.
Independent think-tank Demos has called for a restructuring of the Department for Trade and Industry, which encompasses the OST.
It calls the DTI an "unwieldy assemblage of activities" that "lacks a clear sense of purpose and rationale".
The Demos paper, Surfing the Long Wave , by Charles Leadbeater and Kate Oakley, acknowledges the vital, albeit patchy role in entrepreneurship played by universities and academics, in part through spin-off companies.
But it attacks the DTI and the OST for lacking "dynamic, entrepreneurial and innovative drive".
It recommends that the work of the DTI be divided among three organisations:
* A Business Services Agency, incorporating a Science and Innovation Agency. The agency would help maximise the financial returns from investment in the science base through schemes such as University Challenge
* An Enterprise Division formed by expanding the Innovation and Growth Unit at the Treasury
* A politically independent Business Regulation Agency covering company law, mergers and acquisitions, consumer regulation and competition policy.
Underpinning the drive for innovation would be a new, mainly publicly funded but privately run Knowledge Bank. Its roles would include running an intellectual-property sharing scheme across the corporate sector.
This would incorporate the Patent Office, additional financial support and measures to encourage the public sector to make more use of the products of small, innovative companies.
Ms Oakley, Demos associate and research director of the research and strategy consultancy the Local Futures Group, said: "For universities, the proposals in this paper are about saying 'if this is what you want to do in terms of entrepreneurial activity and innovation, then these are the steps you have to go through'. It is not about a one-size-fits-all solution."
She said it was not just about the big science clusters, such as that growing around Cambridge University. She pointed to Abertay University, Dundee. Abertay has built links with local companies and is encouraging computer game start-up companies.
Details: www.demos.co.uk