Site preparation work is due to start on a new wing at the Isis neutron centre at Rutherford Appleton Laboratory, near Didcot.
Science minister Lord Sainsbury announced Department of Trade and Industry funding of more than £100m for the project.
Prof Jeff Penfold, project scientist at Isis, said the money would be used study and develop materials for a wide range of industrial applications and products, including detergents, adhesives, coatings, lubrication, batteries and drugs.
He said: "The present neutron facility, or target station, at Isis is the most powerful neutron producer of its kind in the world.
"But it's fully developed and can't expand to meet capacity."
Construction work will start next year and the project is due to be completed in late 2007.
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