The prime minister said the institute would be a world first and would test new types of AI for a range of risks, from generating misinformation to posing an existential threat.
Announcing the move before next week's global summit on AI safety at Bletchley Park, Milton Keynes, Sunak said the institute would "advance the world's knowledge of AI safety".
"It will carefully examine, evaluate and test new types of AI so that we understand what each new model is capable of," he said in a speech at the Royal Society, an association of leading scientists.
Sunak said it would explore "all the risks, from social harms like bias and misinformation through to the most extreme risks of all". A prototype of the safety institute, which the government hopes will become a vehicle for international collaboration, exists as the UK's "frontier AI taskforce", which is scrutinising the safety of cutting-edge Al models and was established this year. Sunak said a pause in developing powerful models was not feasible.
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