The Intel Collaborative Research Institute for Sustainable Connected Cities will use data from a variety of sources, including the government and users on the ground, to investigate how to make cities function more smoothly and efficiently. For example, applications could be developed to monitor weather conditions, traffic flow or water supplies and deliver real-time information to customers.

London will be the test bed for the research, which could potentially be applied across the world.

Launched on 24 May at 10 Downing Street by Chancellor George Osborne, the collaboration was the direct result of lobbying by Number 10 for international companies to come to the UK and, in particular, to work with companies in Tech City, a hub for high-tech start-ups in East London.

The centre will initially employ 12 researchers from Intel, UCL and Imperial College. Its budget is undisclosed, but will be drawn from the £48 million pot the company invests in research and development in the UK each year.

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Martin Curley, director of Intel Labs Europe, said that the centre will develop near-market ideas, and will have a physical base at both universities – institutions he said were chosen for their “chemistry” with the company as well as their record in research and innovation.

The centre is part of Intel’s ongoing expansion of its research and development in the UK. The company already has eight British labs, with two more planned for 2012 and a further two for 2013. But this latest success masks the fact that the UK failed to cash in on Intel’s first wave of expansion, with around 40 such labs already existing in mainland Europe.

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Mr Curley told ����Vlog that as a venue for industrial R&D investment, the UK had in the past been “more of a backwater, even though it shouldn’t have been”. “It was kind of like a sleeping giant, and I think the UK has now woken up and played catch-up,” he said.

“I wouldn't say it’s becoming the location of choice, but one of the locations of choice,” he added.

Edward Astle, pro rector for enterprise at Imperial, said the institute would “start small” but planned to expand and incorporate new partners in the future. One of them would be the Technology Strategy Board, which has also set up a centre in the field of sustainable cities. This so-called “catapult” centre is part of an initiative designed to bring universities, business and government funding together.

As a microcosm of the world, London was the perfect test bed for such a project, he added.

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Justin Rattner, Intel’s chief technology officer, said the centre will use the Olympics as one of its first projects as a way of observing “pre-planned stress” on the city’s systems. “Those of you who are Londoners, we’re about to turn your fair city into a lab,” he said. “But don’t worry, we know what we’re doing.”

elizabeth.gibney@tsleducation.com