Jose Manuel Barroso, the president of the European commission who is spearheading efforts to reform Europe's struggling economies, will preside at the ceremony to create a "European Institute of Technology". Such a body would, Mr Barroso argued, "act as a pole of attraction for the very best minds, ideas and companies from around the world".

Mr Barroso believes the institute will be a crucial factor in advancing the "Lisbon agenda", the faltering initiative that is meant to set the EU on a path to overtake the US economy by 2010. Leaders have been forced to scale down the ambitious project after Europe's weak economies exposed differences between reformers, such as Tony Blair, and more cautious figures, such as Jacques Chirac.

Mr Barroso believes that the pace is picking up again after European leaders agreed last October to focus more efforts on meeting the hi-tech challenge from China and India. "The coming players in the knowledge game are China and India," a commission discussion paper on the EIT warned recently. "China alone produces more maths, science and technology graduates each year than the whole of the EU."

But the initiative to create a rival to Massachusetts' MIT is controversial. Dominique de Villepin, the French prime minister, wants the institute to be based near Paris, while some MEPs want it in the Strasbourg European parliament building. Britain wants the institute to be "flexible and virtual" to avoid undermining leading European universities, such as Cambridge and Imperial College London.

A spokesman for Jan Figel, the education commissioner who will attend today's launch, indicated that the EU executive is treading carefully. "The commission will not propose any specific location, only a framework for the institute," his spokesman, Frédéric Vincent, said. "We need a kind of flagship in Europe."

Professor Ian Leslie, the pro-vice chancellor for research at Cambridge University, said the commission should increase the budget of the European Research Council, rather than setting up a new body. "This is a strange way of approaching things. The notion of top down innovation is an oxymoron."