The facility, aimed to help single women, men with fertility problems and same-sex couples to build families, will be based initially at Birmingham Women's Hospital before being extending to cover the whole country.
The Department of Health has given 77,000 pounds to fund the national sperm bank.
Sperm donors in the UK are mostly white, which leaves people from other ethnicities struggling to find a donor. A lack of UK-based donors has also led to a spurt in the use of imported sperm, with America and Denmark being the biggest suppliers to British women, the BBC reported.
The figure was one in 10 in 2005.
The project hopes to "change the face" of sperm donation in Britain, officials said.
The clinic also hopes to encourage more men from ethnic backgrounds to give sperm as most donors in the UK are currently white.
Sue Avery, Director of the Birmingham Women's Fertility Centre, said: "There is currently a national shortage of sperm donors in the UK, especially in National Health Service clinics and particularly among some ethnic minorities.
"At present, some patients needing donor sperm are faced with few safe options and find themselves on waiting lists of up to five years or having to stop treatment altogether."
Avery said the idea of the campaign is to focus on sperm donation as a tremendously positive thing to do and that the men who do this are very special.
"We're spending this money to start something that we hope will grow to the point where nobody has to import sperm."
