The Pounds 3.2 million Lichfield University College in Staffordshire will provide business, management and computer courses from entry through to degree level aimed largely at small- to medium-sized businesses.
Cash from the European Regional Development fund is footing 40 per cent of the bill for the site in Lichfield town centre, a collaboration between Tamworth and Lichfield colleges and Stafford University.
The centre, which will be staffed by lecturers from both the colleges and university, will cater mainly for part-time adult students.
Tamworth and Lichfield's principal, Rupert Herd, said the project would complement local schools, as well as the college's two existing buildings in the town.
He said work was under way to ensure students could enjoy a seamless transition from further to higher level courses.
"It's absolutely essential that we get the progression routes right, and a lot of care will be taken to get those programmes right," he said.
"We think this is the way forward. We are seeing an increasing demand for progression into HE and we are very conscious of the fact that if we meet the target of 60 per cent of the population reaching NVQ level three, there will be more and more students wanting to go forward to higher levels.
"In the longer term we would hope to add other subjects as well. We would very much like to do something in the area of art and design in keeping with the heritage of the area."
The new site was welcomed by Stafford University's vice-principal, Christine Smith, last week at a conference on the divide between FEand HE. The university has been a leading exponent of partnerships with FE colleges.
Last April, Tamworth College took over the adult education centre in Lichfield to become Tamworth and Lichfield Colleges. The college also owns the Swan hotel, which is run as a commercial concern, as well as providing extra teaching space in the town.
Mr Herd said plans had been drawn up with the full co-operation of the local education authority to provide courses complementary to local schools.
He said the Further Education Funding Council had approved the college's Pounds 1m capital investment in the new site, and was confident that funding chiefs would foot the bill for expansion, despite current uncertainty over college growth.