The proposal for a "flagship for excellence" for tech innovation and research has been put before the European Parliament.
The new European Institute of Technology (EIT) would be based across several sites and bring together academic and business interests. The institute would be run by a central governing board, which would oversee a collection of "knowledge communities."
The European Commission is hoping that the EIT will encourage companies to finance research into new technologies in return for a cut of the revenues they generate. The EIT will be bankrolled by the commission, but individual member states will also contribute funding.
According to Jan Figel, European commissioner for Education, Training, Culture and Multilingualism, the institute is necessary to improve Europe's poor record on turning the results of its research and development into commercial projects.
According to the commission, the EIT could be up and running in 2009.
Jo Best of Silicon.com reported from London.