Two of the world's most prestigious universities, the Massachusetts Institute of Technology and University of Cambridge in England, have agreed to form a partnership that officials of both universities said could serve as a blueprint for innovative education and research.

The alliance, to be announced by British Chancellor of the Exchequer Gordon Brown in London on Monday, unites some of academia's best minds--including physicist Stephen Hawking of the University of Cambridge and cognitive neuroscientist Steven Pinker of MIT--under a newly created Cambridge-MIT Institute funded by the British government and private industry in the United Kingdom. No U.S. money will be involved.

The institute is designed to use faculty and students from both sides of the Atlantic to develop new technologies, encourage entrepreneurship and improve productivity and competitiveness.

The institute will initially involve the engineering and management programs at MIT but will eventually include all of its schools, including its highly ranked economics program, officials said.

"These are two great universities on two continents using modern technology and really pulling together to educate the future leaders of the global economy," said MIT President Charles M. Vest, who was to attend the signing ceremony in London with the head of the publicly funded University of Cambridge, Vice Chancellor Sir Alec Broers. "I think of this as sort of a digital bridge between Cambridge, Massachusetts, and Cambridge, England."

In a prepared statement, MIT Chancellor Lawrence Bacow, who has been working on the agreement since Cambridge officials approached MIT more than a year ago, added: "What we are about to do is potentially historic. It could transform both institutions and truly create a new model for the global research university in the 21st century."

The idea of academic cross-pollination is hardly new. Many colleges and universities trade faculty members and participate in foreign study and student exchange programs. Many share resources. Most Washington colleges and universities, for example, are joined in a decades-old consortium that, among other things, allows students to take courses at other member schools and share library resources.

But the Cambridge-MIT alliance, as outlined by officials, expands the traditional notion of cooperative relationships between institutions of higher learning here and overseas.

The institute will closely integrate the institutions, which will develop a joint curriculum so junior-year students can study abroad with ease on either campus, among other initiatives. Officials said the institutions had not yet decided whether the institute would have a physical office.

The institute would also expand traditional relationships between industry and education, another area in which MIT, a private institution, has experience. MIT maintains a distance-learning alliance with the National Universities of Singapore and Nanyang Technical University and established a $25 million partnership with Microsoft Corp. to develop educational technologies.

The new institute will combine engineering, management, and science expertise in programs involving undergraduate, graduate student and faculty exchanges as well as creating a national competitiveness network in Britain.

Integrated research will focus on the nexus between technology and enterprise, and joint initiatives will adapt MIT's programs in system design and management, among other areas, to British industry.

Details of the institute's operations are not yet complete, but university officials said start-up activities will include educational and research programs in manufacturing, product development, and industrial competitiveness carried out jointly by MIT's Engineering Division and Cambridge's Manufacturing Institute.

The British government will provide 80 percent of the institute's $135 million budget for the first five years, with the balance raised from the private sector in the United Kingdom.

For MIT, the partnership offers an opportunity to participate in the education of Europe's next generation of technology leaders, to develop ties to European industry, and to expose its students to European culture, Bacow said. As for Cambridge, he said, "this new partnership represents an opportunity to capitalize on MIT's entrepreneurial culture; to build on MIT's innovative programs that tightly couple management and engineering education; and to collaborate in extending MIT's model of university-industry partnerships to the United Kingdom."