Britain's position as a world leader in emerging technologies was bolstered by a £750 million Budget package aimed at industry.

The strategic investment fund will help companies make the most of research and development in areas such as digital systems, biotech, advanced manufacturing and crucially "green" technology,

A consistent complaint in the past has been that the UK is too slow to exploit the fruits of discovery and innovation.

The new money is intended to help businesses weather the economic downturn by transforming scientific ideas into useful products and services.

In another move, Chancellor Alistair Darling announced a fresh look at the way the tax system affects innovative industries.

The pharmaceutical industry in particular has repeatedly warned that without better tax incentives, global companies will vote with their feet and move their research and development out of the UK.

The £750 million package includes a hefty £250 million element earmarked for low carbon business opportunities and innovation. This will include initiatives on low carbon vehicles, as well as nuclear and renewable energy industries.

A further £50 million will got to the Technology Strategy Board to help it foster innovation and new technologies, and £10 million will specifically be aimed at exports.

Business Secretary Lord Mandelson said: "Backing green, low carbon businesses and technologies will be a priority for the new fund. Ed Miliband (Energy and Climate Change Secretary) and I are determined British business should be world leaders in the technologies and services the world will need as we use energy more efficiently and combat climate change.

"Britain doesn't need to be pessimistic about our economic future as long as we prepare for it. The new fund announced today is a big step forward."

Engineering and technology experts broadly welcomed the Budget proposals, but some thought they did not go far enough.

Dr Robert Kirby-Harris, chief executive of the Institute of Physics, said it was "commendable" that science was being asked to play a key role in ensuring Britain's economic future.

He added: "We are confident that the UK science base is up to the challenge. It must be remembered, however, that scientific advances - in renewable energy research, in the digital industries that have spurred the communications revolution and in other important future industries like biotechnology - require a healthy research base.

"We must continue investing in order to ensure that the UK has a healthy pipeline of scientifically-trained individuals and to maintain and strengthen our leading position in research and its applications."

Tom Foulkes, director general of the Institution of Civil Engineers, said there was "much to be welcomed" in the Budget. He supported the idea of putting green jobs at the centre of a new low carbon economy, but added: "We need to ensure that the UK has the infrastructure to enable us to properly exploit these emerging sectors. So the real question left unanswered in today's Budget is how we are to fund essential infrastructure projects over the long term?"

Dr David Brown, chief executive of the Institution of Chemical Engineers, said: "Investment in green collar jobs, low carbon industries and sustainable technologies is good news.

"We welcome the Government's support and commitment, including the crucial need to fund and promote skills and training."

But Nick Dusic, director of the Campaign for Science and Engineering, accused the Government of undermining the independence of the research councils by forcing them to re-allocate funds to areas with "predicted economic potential".

"There needs to be an urgent review of this decision as it completely destroys the idea the research councils operate at arm's length from government," he said. "Rather than boosting investment in the research base, like our international competitors, the government has moved money around."

The Association of the British Pharmaceutical Industry (ABPI) welcomed the open door on tax reform that might benefit its members.

In his Budget, Mr Darling said the Government would "consider the evidence for changes to the way the tax system encourages innovative activity and the relative attractiveness to global firms as they make decisions on where to locate their research and development and other innovation activities".

A report was promised in November this year after a period of consultation.

This was seen as an important step forward by Dr Richard Baker, director general of the ABPI.

He said: "We welcome government's resolve to create winning strategies for key industrial sectors, with life sciences being one of these."

Lord Rees, president of the Royal Society, Britain's leading scientific institution, said the Budget recognised the need to invest in "applying science and technology".

He added: "Whether it is communications infrastructure, green manufacturing or other technologies, there are jobs to be created at home and exports to be sold overseas. The Obama administration in the US recognises this and we need to respond positively to stay competitive."

Significant investment in carbon capture and storage, offshore wind and energy efficiency would help the UK capitalise on its scientific expertise, he said.

But he also stressed the importance of ensuring adequate resources for top-grade research in areas with no immediate practical benefit.

"The value of our universities lies in the transformative discoveries that emerge unpredictably and unplanned," said Lord Rees.

"The Research Councils should not stifle this potential. We must continue to attract and retain outstanding scientists and engineers, by offering adequate funding and the opportunity to explore the most exciting research questions. If we don't get smarter, we will get poorer."

Dr Clive Dix, chairman of the BioIndustry Association (BIA), said: "The Government has long proclaimed the importance of the UK's bioscience sector and the BIA is encouraged to see indications of support for companies in these challenging times.

"The BIA has been working alongside the Office for Life Sciences to develop a number of initiatives including an innovation fund, and changes to the taxation of intellectual property.

"The small and medium sized companies that make up the bioscience sector in the UK have been hit hard by the current financial crisis.

"We have highlighted the need for a high-tech investment fund. The BIA will be reviewing the fund detail, including the mechanism and the amount accessible to bioscience, to ensure companies in our sector are swiftly able to benefit. It is essential that the fund is now implemented rapidly."