Liverpool City Council has provided a £3.8m loan to match a £3.8m grant from the European Regional Development Fund to pay for 42,000 sq ft of office and laboratory space.
Construction of Liverpool Science Park's third building, Innovation Centre 3, designed by Ryder Architecture, will start in 2012 and is scheduled for completion in 2013.
IC1 was completed in January 2006 and IC2 in April 2009 aimed at attracting start-up and small growing companies from technology through to biomedical sectors.
The third phase will sit over the car park between the two and will be linked to IC1 by a bridge. Neptune Developments completed the first two phases of the development next to Liverpool's Metropolitan cathedral at the top of Brownlow Hill and Mount Pleasant but the third will be built directly by LSP.
LSP is a joint venture between Liverpool University, Liverpool John Moores University and Liverpool City Council. The three partners have underwritten the local authority loan.
IC3 will contain 10,000 sq ft of labs with room for more to be added if demand requires. LSP said there is a shortage of biomedical premises in Liverpool.
Chris Musson, chief executive of Liverpool Science Park, said: "Confirmation of funding for IC3 is a key moment in Liverpool Science Park's evolution, and will provide world leading opportunities for our current tenants and for the region's commercial knowledge economy. We would like to thank our partners for their continued support.
"From our experience, laboratory-based SMEs demand flexibility and our Containment Level Two laboratories and flexible leasing policy will enable the creation of a new and vibrant tenant mix to the Park. We are answering a need and sending a clear message nationally to science-based companies that Liverpool is a high quality destination for commercial knowledge enterprise. Similarly, the new starter pods will make LSP the destination of choice for any young entrepreneurs wanting to mix with like minded companies and will set LSP apart as a place where knowledge based companies from any discipline can work and collaborate together."