The government has awarded £40m to the British aerospace industry to research and develop "green" aviation engines with the aim of reducing the impact of flying on the environment.

The project, Environmentally Friendly Engine, is a £95m industrial collaboration, led by aero-engine maker Rolls-Royce, to design and test technologies for more fuel efficient engines with reduced noise, carbon and nitrogen emissions.

Six UK universities will also take part in the research project including Cambridge, Queen's Belfast and Loughborough.

Announcing the funding today, John Denham, the minister for innovation, universities and skills, said: "New technologies have the potential to make a real difference in reducing aviation's impact on the environment. We need to act now to create cleaner, greener technology to help ensure emissions don't rise dramatically in the future. This technology is part of that.

"This new programme is very important for the UK's aviation industry, which faces significant global competition. Britain must work to maintain its place as a leader in aviation with a highly skilled workforce. Developing new innovative technologies is a big part of that."

Scientists will begin the first round of tests on combustion and turbine components next year. The project will run until 2010 and is part of the UK's five-year National Aerospace Technology Strategy.

Sir John Rose, the chief executive of Rolls-Royce, said, "The programme will develop the advanced technologies required for cleaner and quieter engines and will help the aviation industry meet demanding new targets aimed at reducing its environmental footprint."

The project's industrial partners, including Bombardier Aerospace and Unison Engine Components, are contributing 50% of its total cost. Funding will also be provided by regional development agencies and Northern Ireland's devolved government.