According to the plans, around 320 young offenders, aged between 12 and 17-years-old, will be accommodated in the facility, which is to be located next to Glen Parva Youth Offenders Institute.
The construction works on building the East Midlands secure college will start next year with an opening date scheduled in 2017.
The facility, which will consist of modern living blocks to house the inmates, will have a head teacher or principal at the core of a leadership team made up of educational professionals and offender managers.
The new school will provide strong discipline, while focusing on rehabilitation and education.
In addition, a competition is to be launched for new organisations to bid for education contracts at the current publicly-run YOIs, which aims to more than double the average of 12 hours a week education provided for 1,300 young offenders.
The facility is designed as a pilot scheme for a planned network of secure colleges across England and Wales.
Deputy Prime Minister, Nick Clegg, said: "We need to turn these young people intobetter citizens not better criminals.
"By increasing the amount of time young offenders spend learning, we can help them to move away from crime, take responsibility for their actions, and rebuild their lives."
The Justice Secretary, Chris Grayling, added: "Nearly three-quarters of young offenders who leave custody re-offend within a year; clearly the system as it is at the moment isn't working.
"It's right that the most serious or persistent young offenders face custody but we must use this time to tackle the root cause of their offending and give them the skills and self-discipline they need to gain employment or training upon release."