The BBC's Rosie Millard: "News of the Film Council was welcomed in Cannes"

Mr Smith made the announcement during his visit to the Cannes Film Festival on Wednesday.

The Film Council will act as an umbrella group taking over the role of channelling public funds into British film.

Chris Smith: "It is a good idea to bring government and lottery money together"

It will be backed by money from the government and the National Lottery and will aim to donate £145m to film-makers over the next three years, with a further £5m going to the National Film and Television School.

There will also be an extra £1.5m of private money from voluntary donations from the film industry to back training in technical skills.

Culture Secretary Chris Smith: "A coherent strategy for film culture"

The Film Council will start work in April 2000, taking over responsibility from the Arts Council for allocating National Lottery film grants. The new body will also incorporate the existing British Film Commission and fund the British Film Institute.

Mr Smith said: "The Film Council will develop a coherent strategy for film culture, the development of the film industry, and the encouragement of inward investment, and determine the allocation of resources between them.

Mel Gibson: His Icon company is opening a London office

"The establishment of a single lead film industry body will help to ensure that the film industry builds on its current successes and enjoys many more triumphs in the future."

The hunt is now on for a chief executive of the new body. The post will be advertised next week, and the chair and board will be appointed over the next three months.

Meanwhile, Hollywood star Mel Gibson is to open a British arm of his Los Angeles-based production company Icon.

Icon's British offshoot will be based in Soho, in London's West End, and will produce largely European-based movies.