The European Commission says the proposed European Institute of Technology (EIT) could begin operations as soon as next year, though it is still unclear where the budget for the organisation will come from.

If approved by the European Parliament later this year, the structure of the EIT will be a federation of so-called 'knowledge and innovation communities' (KICs) - partnerships between academic institutions, businesses and other stakeholders - rather than a university with its own professors and diplomas.

'This is a very important step forward, bringing the EIT closer to lift-off,' said European Commission president José Manuel Barroso.

'By strengthening Europe's capacity to bridge the innovation gap with its major competitors, the EIT will help drive a Europe of results. It will help us boost jobs and growth in a lasting and environmentally sustainable way.'

The Commission will contribute €308.7m (£207.7m) to help cover the costs of the EIT's governing structure and co-ordination between the KICs, a small proportion of the several billion required.

Further funding is expected to come from a 'variety of sources', though it is not yet clear how much money the member states or businesses will be willing to contribute.

After approval by the European Parliament, a governing board would be appointed and the EIT's structure finalised. The location for the EIT is also still a matter debate.

The proposal for the EIT is seen as a response to the success of the Massachusetts Institute of Technology (MIT) in the US.