The 70 centres of teaching excellence proposed in the white paper on higher education could be theme-based regional consortia of universities, colleges or departments, according to the Higher Education Funding Council for England.
Each centre will get £500,000 a year for five years, plus the chance to bid for £2 million to improve teaching infrastructure. The money is expected to be used to pay for extra staff and to promote the spread of good teaching.
The white paper calls on Hefce to identify 70 suitable departments by 2006.
But the funding council has widened the scope of the plans by adding excellence in teaching methods.
This could counter criticism that the centres might duplicate the work of the 24 subject centres of the Learning and Teaching Support Network.
Liz Beaty, Hefce's director of learning and teaching, said: "We are keen to balance the notion of reward for excellence in teaching and learning with the need for investment, including wider dissemination of innovation."
A Hefce briefing paper says: "A centre may be subject-specific or cut across subject, department, faculty or even institutional boundaries.
"A centre could focus on problem-based learning (or work-based learning or e-learning etc). Over the five years of funding we would expect it to develop and disseminate this approach further within its institution, through collaborative practice with other institutions, and more widely through the new quality enhancement academy proposed in our strategic plan."
Consultations with academic staff and institutions will start in July, with invitations to bid likely to go out next January.
Patricia Ambrose, executive secretary of the Standing Conference of Principals, said the centres needed a focus. "We value the clear recognition of institutions committed to teaching excellence but there is a danger of overlap with the subject centres.
"Our concern is core funding for teaching. It is good to have these incentives, but when you strip out these strands the funding settlements do not look so good."