Work on the £7 million third phase of Malvern Hills Science Park will begin by the end of the year.

The new building will create 130 jobs, with its three floors of offices and two floors of laboratories designed to meet the growing demand for specialist science-based accommodation in the area.

The European Regional Development Fund and regional development agency Advantage West Midlands (AWM) are funding the project.

AWM chief executive John Edwards said the science park was one of the region's major success stories and its further development would be good for the local economy.

"This new phase will allow companies to expand and will spread the economic benefits of technology into the community," he said.

The first two phases of the science park are already full to capacity.

The new development, scheduled for completion in autumn 2006, will create more than 2,000 square metres of space for businesses to let in addition to the existing 3,000 square metres.

The building is intended to be a "flagship for environmental sustainability", saving 20,000 tonnes of carbon dioxide over its lifetime.

It will regulate water temperature using natural underground energy, while a pioneering flooring structure will reduce the use of fossil fuel.

Science park manager Nigel Shaw said the design was appropriate, as the park is home to many cutting edge technology companies.

"We look forward to showing the completed building to all those that are interested in reducing energy costs in future buildings," he said.