Auckland University's Bionic Joint project has been recognised by Europe's largest applied research institution and is set to receive funding from Germany's Fraunhofer Society.

Prime Minister John Key made the official announcement this week in Berlin, adding that it has been awarded ICON status.

Scientists from the University of Auckland's Bioengineering Institute have been collaborating with Fraunhofer IPA since 2012 to develop a bionic elbow joint for use in human exoskeletons intended to reduce workplace injuries and aid recovery of upper arm functions in stroke survivors.

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Science and Innovation Minister Steven Joyce said the project has the potential to improve the quality of life for those with impaired limbs.

"The technology developed is likely to create real opportunities for New Zealand and German companies in the health devices industry."

Joyce said both New Zealand and Germany produce some of the most "innovative" researchers in the world, "which makes us ideal partners".

Dr Dave Lowe, New Zealand-Germany science and innovation coordinator at the Ministry of Business and Education (MBIE), said scientists have been working on the project for several months, but the project officially started yesterday following John Key's announcement.

He said the project has received substantial interest from the German government due to billions of Euros being lost every year due to workplace injuries.

The bionic joint has been designed as an external prevention device to been worn by workers.

"It's extraordinary technology, it fits to the outside of the arm, senses if a worker is picking up something that is potentially damaging and sends a warning."

The warning comes in the form of a sensor, similarly used to assist with ongoing sport injuries.

The project is a three-year, $3 million collaboration co-funded by the Fraunhofer Society, the IPA, the New Zealand Government's Catalyst fund, and the University of Auckland

"To receive funding from a private research company in Germany is an enormous honour, a sign of great status," he added that only half a dozen projects like this have been funded worldwide.

The intiative, like other bilateral research projects, is actively being supported by the Ministry of Business, Innovation and Education.

It adds another world-class collaboration to the wide range of science and innovation cooperation between New Zealand and Germany.

Lowe said he expects to see the prototype joint working within a year.