(BRUSSELS) - EU ministers on Wednesday chose the Hungarian capital Budapest to host the headquarters of a planned European Institute of Innovation and Technology, the EU's presidency announced.

The European research ministers, at a special meeting in Brussels, chose Budapest over rivals in Germany, Poland, Spain and a joint bid by the Austrian and Slovakian capitals Vienna and Bratislava.

The institute "will become a symbol of the combination of European research and innovative capabilities and the beginning of its operation will," said Slovenian Higher Education Minister Mojca Kucler Dolinar whose country presides the EU until the end of the month.

The planned institute is meant to bridge the innovation gap between the 27-nation EU and major rivals, the United States and Japan.

However unlike the Massachusetts Institute of Technology (MIT) campus, the EU version is planned to link up academic and industrial research from around the 27-nation European Union.

The idea is to concentrate on the fields of energy, climate change and information technology with the possibility of broadening the parameters later.

Work on the project, backed by a budgeted 308.7 million euros (483.5 million dollars), is due to start later this year.

The money is to cover the costs of the European Institute of Innovation and Technology's (EIT) governing structure and of coordinating people involved in the institute's first two or three research units.

The total cost of the project will be much higher, with the balance of the funding sought from national grants and industry.

The scheme has faced frequent criticism since its inception for being another costly research project which does not solve the main problem of European research: a lack of money.

The EIT project, championed by EU Commission head Jose Manuel Barroso, was first presented in 2006 as a European answer to the United States' prestigious MIT.

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