The Technology Strategy Board (TSB) has received its biggest ever budget, with £440m available to support innovative companies, including digital technology businesses.
Minister of state for universities and science David Willetts (pictured) confirmed that the agency will get £50m more than last year.
TSB funding supports small businesses that are turning ideas into products and services. The TSB said independent research shows that every £1 it invests returns £7 to the UK economy.
Willetts said: "The £440m budget means there will be more funding available than ever before for businesses across the country to bid for and help turn their ideas into reality, bridging the so-called 'valley of death'.
"Some 60% of funding is going to small and medium-sized businesses, meaning that there are great opportunities for businesses to thrive, grow and generate jobs.
"The Technology Strategy Board works across business, academia and government, helping companies take ideas through to commercialisation."
More on SME funding
As part of the TSB's plan, the budget for its Small Business Research Initiative (SBRI) will be increased to £100m in 2013/14, and £200m the following year.
SBRI funds companies to develop products in response to needs identified by the public sector. Since its launch in April 2009, it has run 124 full tender competitions, resulting in 1,270 contracts awarded to SMEs‚ many of which are IT-related‚ at a total value of £104.8m.