The BBC's film division is to receive a £100m boost in a three-year deal that will enable the corporation to make more big budget movies.

Until now, BBC Films has confined itself to smaller projects such as Billy Elliot, but the new deal with a film financing house will enable it to move up a gear. The news, announced yesterday at the Cannes film festival, boosts the industry. There are no British films com- peting at this year's festival.

The agreement with the Cobalt Media Group, which has backed UK films including the James Bond movie The World is Not Enough and Aardman Animations' Chicken Run, will allow BBC Films to make a series of movies with budgets in excess of $12m.

BBC Films and Cobalt share an equal equity partnership that will give the corporation a 50% share of net profits from any movies produced through the venture.

David Thompson, head of BBC Films, said: "This deal means we can move higher up the value chain, sharing profits 50/50 with Cobalt once costs have been recouped. But we will not be putting up 50% of the money."

Mr Thompson pointed out that the deal would also allow the BBC to hang on to talent that would otherwise go to Hollywood, by giving them bigger productions to work on.

Many British directors who started at the BBC are now working in Hollywood, including John Madden (Shakespeare in Love) and Stephen Frears (High Fidelity).

The BBC stressed that it would continue to make lower- budget films such as Iris, the life story of the novelist Iris Murdoch starring Judi Dench.