The Premier League is set to unveil a new European cup competition which will see English Under-21 teams take on continental opposition this season.

Sportsmail can exclusively reveal that the top eight clubs from the U21 Premier League — including Manchester United, Manchester City and Chelsea — and eight including Celtic from other countries will make up the 16-team tournament.

The initiative is all part of the Elite Player Performance Plan introduced in 2011 to improve the standard of young players the top English clubs are producing.

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Winners: Chelsea celebrating victory in the 2013/14 U21 Premier League

16 TEAMS INVOLVED England: Chelsea, Fulham, Leicester City, Man City, Man Utd, Southampton, Sunderland, West Ham. Europe: Celtic, Athletic Bilbao, Benfica, Borussia Monchengladbach, Schalke, FC Porto, PSV Eindhoven, Villarreal Advertisement

Liverpool, who finished runners-up in last season’s Under 21 development league, have not taken up the opportunity, giving West Ham, who finished ninth, the chance to step in.

The competition will run parallel to the revamped domestic Under 21 league. That now carries the added interest of promotion and relegation and will see both Sky Sports and BT Sport televise 10 matches live.

The organisers are hopeful matches will attract good crowds and it is expected clubs will field their best young players just below first-team level.

Schalke academy director Oliver Ruhnert helped produce four of Germany’s World Cup winning squad and is one of Europe’s most respected authorities on youth football. He jumped at the chance to enter his Under 21 side.

‘This is a fantastic new initiative and the Premier League have been very good in setting it up,’ he told Sportsmail.

‘You need to expose your players to different types of football and different countries in front of foreign crowds.’

Opportunity: It will provide a chance for England's best youngsters to test themselves in Europe

Triumph: Chelsea youngster Lewis Baker celebrates the winner in the final against Manchester United in May

Teams will be allowed to field three players over the age of 21. The format comprises four groups of four with the winners and runners-up advancing to the quarter-finals. All knockout games will be played over two legs and it is hoped the clubs’ main stadiums will be used for matches.

The competition is designed to expose prospects to foreign opposition and take them away from the staid, behind-closed-doors environment of domestic youth football which has been criticised in recent years.

There will, however, be no commercial opportunities during the inaugural season of the Premier League's new European cup and they are keen for it to be seen as a development opportunity; no prize money will be awarded to the winners, for example.