A design institute is to be established in Dunedin. It will be the first in New Zealand.
Prime Minister Helen Clark announced on Monday the Government is to contribute $12.5 million to the project, which is a collaboration between Otago Polytechnic and Otago University.
The Government's suspensory loan was granted to Otago Polytechnic and if the money is used as intended, it does not have to be repaid.
Miss Clark says design is a key field that can be grown further in New Zealand.
She says it is increasingly important in global markets, particularly the idea of building sustainability into the design process and concepts.
The Otago Institute of Design will be built on the former Wickliffe Press site, which Otago University is currently in the process of buying from the Dunedin City Council.