 |  New technologies provide better quality data  |
More detailsCalled the Centre for Earth Observation Instrumentation, it will pull together university and industry expertise.
British instruments fly on many of today's major satellites, gathering data on changes in the atmosphere, in the oceans and on the land.
It is hoped the centre will put the UK in a strong position to win contracts for work on future spacecraft.
The new initiative comes from the Natural Environment Research Council (Nerc) and the Department for Trade and Industry (DTI).
The centre will have offices at the Astrium aerospace company in Stevenage and at the University of Leicester - but its main role will be to coordinate research efforts across the country.
"The priorities in the first instance will concentrate on new remote sensing technologies relating to atmospheric chemistry and how that relates to climate," explained Dr Arwyn Davies, director of Earth observation for both Nerc and the British National Space Centre.
"We think we have a number of strengths in the UK to play to on that front," he told BBC News.
British instrumentation has been incorporated into a number of recent high-profile Earth observation missions, including the European space agency's (Esa) Envisat platform and the US space agency's (Nasa) Aura satellite.
50 years
An example of the excellence the centre hopes to encourage is the Microwave Humidity Sounder which was lofted last year on Metop, Europe's most advanced weather and climate spacecraft.
The MLS maps water vapour in the atmosphere at unprecedented resolution.
The UK is playing a significant role in Esa's Earth Explorer programme. 
This is developing smart, relatively low-cost missions to obtain fast answers to important environmental questions.
The UK is currently leading one mission - the Cryosat mission to track changes in the polar ice caps - and has a significant interest in a second venture called Earthcare, which will study clouds and atmospheric particles (aerosols).
The data these and other spacecraft obtain will deepen scientists' understanding of the Earth system and help refine the computer models they use to forecast the future.
Commenting on the new centre, Science and Innovation Minister Malcolm Wicks said: "We've come a long way from the first basic satellite of 50 years ago to the sophisticated instruments we use today.
"Earth observation technology is becoming increasingly important for monitoring climate change. This new centre will boost the UK's capability in international programmes and ensure that it remains at the forefront of Earth observation technology well into the future. "
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