Surrey University is to make 70 of its 350 contract research staff permanent from January. All staff at grade RA2 and above who have more than six months to run on their contracts will be eligible.
Nigel Gilbert, pro vice-chancellor with responsibility for staff development, said it took him four years to get Surrey to agree.
"I had been a principal investigator of many research contracts and grants for over 20 years," he said. "It always seemed unfortunate that senior research staff have a succession of temporary contracts, suffering overwhelming insecurity."
He said the benefits to both staff and the university had been accepted and that people had been persuaded it would not bankrupt the university.
The bulk of salaries will be paid through research grants, as with short-term contracts, but the university will provide bridging salaries between projects.
The university has not calculated how much the changeover will cost. Initially, bridging money will come from a two-year £50,000 grant from the Higher Education Funding Council for England to reward and develop staff initiatives. The university said it might also need to dip into non-recurrent funds.
The new contracts will be similar to those for non-academic staff, rather than to those for permanent academic staff. The researchers will keep statutory redundancy entitlements.
Surrey is the first English research-intensive university to make such a move. Robert Gordon University in Scotland transferred its contract researchers to permanent positions in August.
Legislation to compel universities to treat fixed-term employees comparably with permanent staff came into force in October.
Association of University Teachers assistant general secretary Malcolm Keight said: "A casualised labour policy damages the fabric of higher education and demoralises its staff. I welcome the development at Surrey as the first step towards meeting the new legislation."
The House of Commons science and technology select committee recently criticised the high level of staff working on contracts. It found that in 2000-01, 41,000 of the 43,000 academics exclusively working as researchers in UK universities were on fixed-term contracts, a rise of more than 33 per cent since 1995.
Committee chairman Ian Gibson said: "Congratulations to the University of Surrey. It is way out ahead. Other universities must follow suit."