The last year has seen a dramatic hike in R&D investment in the UK, with a total increase of more than £2bn.
According to the Department of Trade and Industry's 2006 R&D scoreboard, spending on research and development in the UK has risen to £19.2bn this year from around £17bn in 2005.
One of the key growth areas is the software sector, which saw a 13 percent increase in R&D spending. Other big growth areas include the aerospace and pharmaceutical industries.
Some of the overall increase in spending is due to a number of companies revealing their R&D spending for the first time, but a third of this increase is the result of a 4 percent boost in spending from the UK's top 800 companies.
Minister for science and innovation, Lord Sainsbury said the results show the UK is an "attractive location for R&D activities, and companies are increasingly recognising the benefits of the UK as a productive environment for R&D investment".
The figures show UK R&D investment is growing at the same rate as in the US, with companies from both sides of the Atlantic increasing R&D spending by around eight percent.
Lord Sainsbury acknowledged there is still room for improvement. He said: "Global competition remains strong and the government is committed to making the UK one of the best places in the world for science and innovation."
The UK figures follow encouraging results from the European Commission's Industrial R&D Investment Scoreboard, published in early October.