The Research Partnership Investment Fund will grow from ?100 million to ?300 million, Chancellor George Osborne told the Conservative Party conference in Birmingham.
Under the scheme universities can bid for between ?10 million and ?35 million in public funding for capital projects, provided they can double the investment in funding from industry, charities or philanthropists.
The first ?100 million of the fund, announced in this year's budget in March, was heavily oversubscribed with what the government described as "high-calibre bids".
The Higher Education Funding Council for England, which administers the fund, will issue a further call for new and reworked proposals shortly.
Winning proposals so far, subject to final due diligence by Hefce, include a collaboration between Warwick University, Jaguar Land Rover and Tata Motors European Technical Centre to build a ?92 million National Automotive Innovation Campus.
Other winning projects include a 5G centre for mobile communications at the University of Surrey and a ?138 million centre for targeted cancer research at the University of Oxford. The University of Birmingham will work with Rolls Royce on a ?60 million interdisciplinary research centre, the University of Liverpool will collaborate with Unilever on a materials chemistry research hub in the North West and the University of Dundee has plans to build a ?38 million life sciences centre for translational research in collaboration with pharmaceutical companies and the Wellcome Trust.
Hefce has said it will be announcing the other successful bids next week.
President of Universities UK, Eric Thomas, said the decision to extend the fund was a ringing endorsement of the "significant contribution the UK's universities make in strengthening our economy".
"Our universities are among the very best in the world and our research base is second only to the USA. In the knowledge economy, sustained economic growth and UK jobs depend on this kind of investment."
Referring to the Times Higher Education World University Rankings, which last week showed that UK universities still ranked second in the world, Professor Thomas added that it was vital the UK remain ahead of the game.
"This new investment will help us maintain our position in an increasingly competitive market," he said.
The Campaign for Science and Engineering welcomed the announcement but stressed that the additional ?200 million still did not offset the "huge cuts" made to the research base in the 2010 Spending Review.
"We still have a ?1 billion deficit. Osborne is doing the right thing in reversing some of those cuts, but we need to go much further or risk getting left behind by our international competitors," said CaSE director, Imran Khan.
"Germany, for instance, has increased its research and education spending by nearly 20 per cent since 2010, while we've been cutting back."
The additional ?200 million investment is money from outside the existing universities and science budget, with the government to set out details on how it is to be funded in its autumn financial statement.
The government anticipates that the total ?300 million investment will be more than doubled through industry investment producing an overall fund worth ?1 billion.
The 1994 Group of small research-intensive universities was among those welcoming the announcement but pointed out that the funds were only available to support large-scale projects, in a minority of institutions.
"As we approach the next spending review the government needs to reaffirm its commitment to investing in the very best research, regardless of the size of the institution in which it is carried out," a spokesman said.