The deal with Swansea Council will see university teams work from their new Centre for Regional Innovation, which will occupy the whole of Civic Centre’s third floor.

The council will earn rental income, while the school – which will remain based at the university’s Bay Campus - will grow and the city will benefit from having new academic excellence in its business community.

As preparations are made for the new Civic tenants, council staff based on the third floor will be relocated to work alongside colleagues in the same building before the New Year.

Staff at the council and university have been told of the change. Council services will continue to be of high quality and will not be harmed by the arrangement.

Cllr Rob Stewart, Swansea Council Leader, said: “Building on many other examples of close collaborative work alongside Swansea University in recent years, this visionary new partnership is great news for the city.

“It will be an important element of the £1.3bn City Deal, which will deliver real transformation right across the city region in the months and years ahead.

“Our vision for the City Deal is to work with a range of partners to create thousands of jobs and a world-class location for digital and internet innovation. It will draw in investment to make the most of the creative talent and skills we already have. The Centre for Regional Innovation will be a key component.

“For the council it means that we secure valuable income for areas of a building no longer needed by our officers who are successfully modernising the way they work by becoming more mobile and agile."

Professor Marc Clement, Dean of the School of Management at Swansea University, said: “The university and school played a key role in delivering the City Deal. It allowed us to work closely with our local authority colleagues, so I'm pleased that we're now building on this relationship.

“This important step will see the school grow and get closer to business. The coming together of two of the city's major employers will be a hugely positive step for not only the school and university, but also for the region.”

School of Management staff are expected to undertake several months of preparatory work before moving in.

Professor Clement added: “As part of the School of Management’s strategy, we are committed to delivering regional impact through research, enterprise and innovation. The Centre for Regional Innovation will allow us to expand our collaborative learning environment outside of our home at the Bay Campus.”

In the longer term, as part of major plans to regenerate the city centre, the council still intends to vacate and demolish the Civic Centre.

Cllr Stewart said: “Our development managers for the Civic site, Trebor Developments, are making progress on a masterplan for the location.

“This includes ongoing discussions with the university about the potential for a hydro hub facility that could include an aquarium and an interactive science attraction.

“New council offices have been earmarked for the Lower Oxford Street car park site in the city centre, so the Civic will start to be vacated and demolished once that new building is ready.

“The timings of our overall Civic Centre regeneration plans won't be affected by this latest partnership work with the university.”