The Boards of Management of Munro College and Hampton School are to develop a proposal for the operation of the Malvern Institute.
The Institute, which will be opened this year, will respond to the social adjustment needs of secondary students who have to be removed from the regular classroom.
The proposal is to be developed in collaboration with the Ministry of Education, the Dickenson Trust and the Bethlehem Moravian College.
The Education Minister Ronald Thwaites said a wider behaviour modification programme will also be developed, as the Malvern facility can accommodate about 50 students at a time.
He said the move is in recognition of the serious waste of effort and money in the secondary education system caused by misbehaving students.