Liverpool and Liverpool John Moores universities are to be provided with a science park by the regional development agency.
The Liverpool Science Park will be a joint venture between the universities, the city council and the North West Development Agency (NWDA) with banking partners, as part of a 15-year economic development strategy for Merseyside. It will not cost the universities a penny.
It aims to encourage the growth of science-based businesses while retaining and nurturing research talent in the universities.
Michael Brown, vice-chancellor and chief executive of LJMU, will chair the steering group. He said: "The universities' responsibility will be to drive the park and provide offices to bring in companies." He added that being given the land, estimated to be worth about £12 million, meant the universities would not feel pressurised to let the office space to companies that were not suitable.
He added: "It's a science park, not a business park. There are three criteria to entry: medium-term commercial success, a relationship with one of the universities and potential to give economic advantage to the people living around the park."
Professor Brown said the park fitted in perfectly with the white paper, which calls for universities to work closely with their local regions.
But he said his university would not be forced by the government into a narrow role. "We are going to be a mixed economy, with research, knowledge transfer, teaching and work with the community."
The development will consist of a 3,250 square metres science park with space and an incubator located close to the universities. It will be an extension of the existing Wavertree Technology Park and the first businesses are expected to move in by summer 2004.
In the past 18 months, Liverpool University has spun off 20 companies, and LJMU 21. Professor Brown said all were thriving.
Aidan Manley, NWDA area manager for Merseyside, said: "The agency's equity stake will be the land and property. The universities can bring research and academic capacity as well as expertise in having access to venture capital. Working together we can make something special."
• A science and business park at Keele University is to benefit from a £3.3 million investment programme.