The Institute of Education and University College London will cooperate in five areas, including research, teaching innovation and the improvement of schools in the capital, possibly through the creation of a London Education Trust.

The two institutions, which are both part of the University of London and based in the Bloomsbury area of the capital, will also seek to save money by merging administrative and professional services.

A joint steering group, which will be co-chaired by a senior member of staff from both institutions, will report regularly to each governing body on the partnership's progress. It will report back on the project's long-term future by March 2013.

Chris Husbands, director of the IoE, welcomed the link-up, saying: "The potential synergy between our two institutions is enormous.

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"Our geographical proximity, complementary missions and range of intellectual and academic resources offer rich opportunities for collaboration.

"We are keen to develop a truly strategic partnership that respects and builds upon the vibrancy and unique strengths of both organisations."

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Malcolm Grant, president and provost of UCL, said: "This is a truly exciting initiative. There are many areas in which both of our institutions are world-leading and already enjoy close collaborative links, such as in population studies, quantitative social sciences and educational neuroscience.

"We envisage that the proposed partnership will not only build on these, but open up wholly new themes and opportunities."

jack.grove@tsleducation.com