UK high street giant Marks & Spencer has agreed a deal with Australian Wool Innovation Ltd (AWI) for the development of new wool and wool products, it was revealed on Wednesday.

The two companies have signed a two-year agreement to develop new wool and wool blend products and provide a commercial consumer focus to AWI's future research and development investments.

AWI business development manager, Peter Silk, said the memorandum of understanding (MOU) will help the development of improved and more cost effective fabrics and generate profit for the domestic industry.

"What the MOU represents is the combination of research and development with a hard-edged commercial reality," he said.

M&S specialist wool manager, Linda Szpala, added the agreement would result in a better process for identifying opportunities for Australian wool within the retail chain.