Lampeter University has said it was facing increased pay costs
Two Welsh higher education institutions are to merge to create a new larger university.
Officials from Trinity College, Carmarthen, and the University of Wales Lampeter, Ceredigion, will begin to establish the new university in March.
Earlier this year, Lampeter university threatened redundancies because of a significant rise in 2009 pay costs.
The university's vice chancellor said the move would protect jobs and attract substantial investment.
The merger decision was made after the governors of Trinity College and Lampeter considered the report of a joint working group appointed to explore the possible benefits of any collaboration.
Dr Medwin Hughes, who will lead the new university, said both the institutions were very different but each would bring expertise and knowledge in different areas to the new university.
Alfred Morris, the University of Wales Lampeter's Vice Chancellor said the new university could enjoy an international reputation.
"I have no doubt that what is now proposed is in the best interests of staff, the local economy, and Wales," he said.
"For the towns of Carmarthen and Lampeter and for those who live and work in and around them, this will protect jobs and attract substantial investment.
"Most importantly, these developments are in the best interests of present and future generations of students."
Lampeter had strike threats over the redundancies and there was a review of its management and future.
Meanwhile, Trinity College has been given taught degree awarding powers, which means they will be able to validate their own degrees as well as delivering University of Wales degrees.