The Higher Education-Business and Community Interaction (HE-BCI) survey said the number of spin-off businesses aged three years or older increased to 669 in 2005-6, from 592 in 2004-5.

Formal collaborative research between businesses and funding is now worth almost £600 million, a 12% increase on the previous year.

Minister for Lifelong Learning, Further and Higher Education, Bill Rammell, said:

"These figures show the crucial economic part that our universities and colleges are playing in the economy.

"Business and academia are forging strong ties, with collaborative research an important way of developing new technologies to help give the UK a leading edge in an increasingly competitive world."