Known for its archive, theatres, festivals and education initiatives, the BFI is extending its function in the development of the arts to include funding.
From April 2011, the institute will also be responsible for distributing lottery money to filmmakers - a role previously carried out by the recently abolished Film Council.
In addition, the BFI will be in charge of audience development and public funding to support film across the UK.
Chairman of the BFI Greg Dyke said that the news was a "great vote of confidence for the BFI" and that it's a "bold move to create a single champion for film in the UK" adding, "What we will do now is make sure that our investment in film is properly targeted and transparent".
It was also announced that Film London will continue the Film Council's role of promoting the UK as a filmmaking destination.