The Government's Education Funding Agency has approved a feasibility study into the new University Technical College in Burnley.
The UTC will be housed in the refurbished Victoria Mill complex as part of wider plans to regenerate the surrounding Weavers' Triangle area. It will provide technical studies for students aged 14-19 through Visions Learning Trust, supported by the lead sponsor and local training organisation Training 2000, local businesses and the university sponsors University of Central Lancashire and Liverpool John Moores University.
A planning application will be considered by Burnley Council later this month and, if approved, work would start on site within weeks and the first students would begin classes in August 2013.
The council has committed £800,000 towards the project, mainly from Heritage Lottery Fund money.
Steve Rumbelow, chief executive of Burnley Council, said: "This is excellent news and, subject to planning consents, we can press the 'go' button on this exciting project.
"The UTC will form the foundation stone of wider plans to regenerate and breathe new life into the whole Weavers' Triangle area. Not only that, it will provide much-needed practical ,technical and other skills for young people from Burnley and surrounding areas to prepare them for the workplace, and provide local employers with a young, skilled and motivated workforce."
Steve Gray, chief executive of Training 2000, lead sponsors of Visions Learning Trust UTC, said: "This is great news and another step closer to realising our dreams of establishing East Lancashire's first UTC.
"Visions Learning Trust will offer an alternative to traditional education routes and will engage young people through hands-on, technical learning that will give them a real flavour of what life is like in the world of work. It will also complement and support the current educational offer."
Gareth Smith, of Barnfield Construction, said: "We and our architects Capita Symonds have done an enormous amount of work in a short time to ensure this project is ready to go and can be open for business in August 2013. We are already starting to gear up and are aiming to be on site in mid-June."