The Central Queensland University (CQU) and the Central Queensland Institute of TAFE will merge to form a single institution, marking the first tie-up of its type in Queensland.

Minister for Teritary Education and Skills, Craig Emerson, welcomed the announcement. Saying it will form a tertiary education powerhouse that will offer everything from Certificate I through to PhDs when it opens its doors in 2018.

As part of the deal, a new engineering complex will be built at CQU's Mackay South campus. Its Rockhampton Allied Health Complex, meanwhile, will be expanded with new clinical teaching spaces, laboratories, classrooms and theatres.

Interactive learning systems will also be installed across campuses at Mackay, Rockhampton, Gladstone and Emerald to enable leading-edge presentation and collaboration.

The expanded facilities will be partly funded through a $73.8 million investment by the Government's Structural Adjustment Fund.

Vice-Chancellor and President Professor Scott Bowman said the much sought-after funding would help to transform post-school education and training across Central Queensland.

"I sincerely thank the Commonwealth Government for unlocking these crucial funds, which are absolutely essential to a successful merger with CQ TAFE," Professor Bowman said.

"With this funding in place, I am confident that we can now finalise discussions with the Queensland Government and take the last few steps towards making our dual sector vision a reality.

"This is a transformational project that will make it easier for more young people in the region to study beyond high school," Dr Emerson said.

"This translates into higher skills and better job opportunities in the Asian Century." 

The new institute is estimated to have a student base of up to 40,000, and will create 120 new jobs at its completion in 2018.