Investment in science and hi-tech innovation will gain from a £1bn boost in the Budget which will increase overall government spending on the sector by 25% over the next four years.

Gordon Brown said innovation can drive economic growth in the UK and a major increase in the science budget was important in keeping Britain's place in the global economy.

A Treasury spokesman said the allocation was UK-wide and would include the devolved governments of Scotland and Wales. Public funding will increase by a quarter by 2010-11.

It was not known how the funding will be split but an announcement was expected in the Comprehensive Spending Review. The Scottish Parliament would decide where the money should be invested, said the spokesman.

The Chancellor said: "My view is that in all advanced economies, public and private investment in the great new drivers of growth, innovation and education, will need to rise towards 10% of national income. And as part of our plan to double investment in science, I can announce that in the next four years public investment in science will rise from £5bn this year to £6.3bn by 2010-11 - a 25% increase."

Trade and Industry Secretary Alistair Darling said: "This is a very good settlement for science and technology and is a strong vote of confidence in British research, so important to innovation and jobs."

Research and development will also be helped by a reduction in corporation tax, from 30p to 28p, and tax incentives for small companies.

Dr Richard Barker, director general of the Association of the British Pharmaceutical Industry, said: "The reduced rate of corporation tax will be a modest but welcome step in the right direction in support of high-technology bio-manufacturing, where tax breaks in other countries have had an adverse effect on the UK's global position."

The tax credits were welcomed by Dr Peter Cotgreave, director of the Campaign for Science and Engineering.

"If the UK's economy is to succeed in the coming years and decades, we need to ensure this country is seen by science and engineering-based businesses as an attractive and competitive place to come."

Tom Foulkes, director general of the Institution of Civil Engineers, said: "Without investment in science, we will not inspire tomorrow's engineers who are needed to enhance our infrastructure."

However, many in the science community dismissed the announcement, saying it was "not enough".

Paul Noon, general secretary of the scientists' and engineers' union Prospect, said: "This increase is nowhere near as good as it sounds, as science costs rise faster than inflation."

Dr Richard Pyke, chief executive of the Royal Society of Chemistry, said: "At this time of significant competing pressures, it is encouraging to see the government is maintaining its commitment to science, and the Royal Society of Chemistry looks forward to being involved in the detailed implementation of government strategy.

"However, scrutiny of the figures shows that the science budget remains a fixed proportion of projected GDP. More is needed now, because in these times of extraordinary circumstances - climate change and rising global competition - extraordinary measures are demanded."