A new university for Cumbria is set to open to students next year.
The University of Central Lancashire (UCLan) will hand over its Penrith and Carlisle campuses to the new University for Cumbria in August 2007.
The Cumbria Institute of the Arts and St Martin's College have already agreed to merge to become part of the new university based in Carlisle.
Cumbria County Council welcomed the move and said it would boost the region's economy.
Details of the merger were confirmed at a meeting at Carlisle Cathedral on Thursday.
Council leader Tim Stoddard said: "We're right behind the new university and believe it will boost Cumbria's profile nationally.
"For too long we've suffered a brain drain, where our primary and secondary schools have produced highly talented pupils, only to see them go elsewhere for their higher education.
"It will play a vital part in bringing new people into the county and will become part of the region's economic lifeblood. Today's announcement is a major step forward, and a welcome one."