A £12m donation has been made by the James Dyson Foundation in order to set up a new department at Imperial College London that the inventor hopes will "catalyse Britain's economic growth".

The Dyson School of Design Engineering was made possible by the biggest single donation in the foundation's history, which allowed Imperial to purchase a building from the Science Museum in South Kensington.

"We want to create engineers who are bold and commercially astute," Sir James Dyson said. "They will use their skills, nurtured in the Dyson School, to develop future technology that will catalyse Britain's economic growth."

The UK Chancellor George Osborne expressed his support for the Dyson School, which will help address the shortfall of engineers in the country. "Backing Britain's world leading science, research and innovation is a key part of our long term economic plan," Osborne said.

"It's fantastic to hear about the new partnership between the Dyson Foundation and Imperial College to open the new Dyson School of Design Engineering that will play a key role in training the next generation of design engineers."

The Chancellor also approved a reinvestment of funds that will allow the Science Museum to transform around a third of its space over the next five years.

The four year MEng course in design engineering, set to begin in October 2015, will see 40 students follow a curriculum developed in partnership with Dyson engineers.

"Design combines the best of technical expertise with creativity and the Dyson School of Design Engineering is uniquely placed to bring these together in its student experience and research," said Alice Gast, president of Imperial College London.

"Imperial and Dyson passionately share a vision for educating engineers to elicit innovative thinking and problem solving. The James Dyson Foundation's generous donation, along with Dyson's industrial expertise, gives us the opportunity to create a world-leading school for a new kind of engineer to design the future."