The federal and state governments are closer to signing off on a funding deal to boost economic activity in Perth after a meeting between Premier Mark McGowan and federal Cities Minister Alan Tudge on Monday.

An agreement would focus on increasing Perth's population density through relocating a university campus to the CBD.

The state and federal governments are hoping the increase the population of inner-city Perth. Credit:Heather McNeill

“We have the unique opportunity to create a vibrant presence in our city by collaborating with the federal government, universities and businesses,” Mr McGowan said.

“A City Deal will help activate our city centre and provide an economic stimulus in the heart of our city, supporting small businesses and local jobs.”