Heriot Watt and Borders College will combine on one campus

The two institutions will come together at the university's Netherdale site where students will share facilities.

The project - costing �31.5m in total - will provide new textiles and design facilities, shared lecture theatres and a learning resource centre.

Work will start later this year and is expected to be completed in 2008.

In a separate initiative, Heriot-Watt University will also develop student residences.

In addition to the SFC investment, the funding package is completed by the two institutions and the European Regional Development Fund.

'Great example'

"This is an integrated and sustainable facility which will deliver post-school education in the Borders for the foreseeable future," SFC chief executive Roger McClure said.

"I commend the college and the university for coming together in this imaginative way to secure excellent, affordable facilities for the Borders.

"This is a great example of how the needs of Scotland's more rural areas can be met really well."

The investment will also provide a community facility in Hawick.