Coventry aims to double the number young entrepreneurs in the city by 2008, after being named one of four UK towns to launch a major national pilot scheme.
The city is to become a demonstration project - along with Liverpool, Wakefield and Lowestoft - for the Make Your Mark campaign.
The scheme, which will receive around £500,000 from the Treasury over two years, is supported by the British Chambers of Commerce, the CBI, the Federation of Small Businesses and the Institute of Directors.
Other organisations will also be involved in the scheme including the Arts Council England, Learning and Skills Council, Shell LiveWIRE and The Prince's Trust.
The Coventry campaign will recruit an initial team of four staff and will be part run by Coventry and Warwickshire Chamber.
Louise Bennett, chief executive of the Chamber said: "This is a great opportunity for Coventry and fits very well with the Government's current agenda to foster entrepreneurial skills in young people.
"The aim of the scheme is to reach out to those between the ages of 14 and 30 and encourage them to be more creative about the way they look at business.
" It's not only about encouraging them to start their own companies, but also to make sure that they are creative in business and think outside the box."
Kevin Steele, chief executive of the national campaign, said: "Make Your Mark aims to inspire young people in Coventry to turn their own ideas into reality - by starting businesses and community projects and by getting new ideas off the ground in existing organisations.
"We believe these young people have a tremendous capacity to have ideas and make them happen - but if we want that 'can-do' energy to be released, young people will need the support and encouragement of parents, teachers, employers, the media and others in Coventry."
However, the Forum of Private Business issued a warning about the scheme, saying they feared it would lead young people into bankruptcy.
"While we support the education of enterprise in schools, the aim to raise the number of young people starting businesses is doomed to failure," and FPB spokesman said.
"Many young people who start businesses are bankrupt within three years because they lack both experience and financial support. The Government would be better off supporting groups that have proven they can launch successful businesses.
"These include women, ethnic minorities and the 35 to 40-year-old age group who have previous corporate experience and spotted a niche market.
"There is a total lack of support for these groups with Government organisations such as Business Link commanding a very poor reputation in the private sector.
"We invite the Government to put their money where their mouth is and stop paying lip service to entrepreneurs."
Ms Bennett said she was confident that the Make Your Mark scheme would provide positive results for Coventry.
"Although it is still early days, we have seen similar projects in Europe contribute to a better educated, less risk-averse and creative business community," she said.
"This is a scheme for the long term and we will be developing a strategy over the next few months with strict targets which we will aim to achieve."
Recruitment of Coventry's Make Your Mark team begins next week, with the scheme due to be running by April 2006.