British film stars are set to give their invading American counterparts a run for their money in the West End under a new scheme launched today. Natural Nylon Entertainment, the UK film production company founded by Ewan McGregor, Jude Law and others, has joined forces with the powerful Ambassadors Theatre Group (ATG), to form a joint venture that will work across both stage and screen.

The company, Natural Nylon Theatre, has been formed to produce a range of drama, comedy and mid-scale musicals for the British stage. It will be commissioning work by new writers, as well as re-interpreting classics for modern audiences. The Natural Nylon theatre productions will either star the actors themselves - a group which also includes Johnny Lee Miller, Sean Pertwee and Law's wife Sadie Frost - or utilise their expertise and contacts. The company also hopes to evolve as many as possible of the stage productions into film projects, building on a successful tradition of British film often originating from the theatre.

The first three projects undertaken by Natural Nylon Theatre will be: a new production of Dr Faustus, directed by David Lan; a new adaptation of Chekhov's Three Sisters, to be written by Christopher Hampton and directed by Sean Matthias; and a new production of The Collector, adapted by Mark Healy from the novel by John Fowles, to be directed by Mark Clements.

ATG has also signed a wide-ranging development agreement with the Young Vic Theatre. The intention is that several Natural Nylon projects will premiere at the fringe Young Vic before transferring to the West End.

In a separate collaboration, ATG will work with Oscar-winning Shakespeare in Love film producer David Parfitt to transfer stage concepts to the big screen. Yet another deal, expected to be announced soon, will see ATG team up with London-based Carlton Television.

ATG is one of the most powerful theatre owners in the UK, with nine West End venues and dozens of regional powerhouses in its empire. The stage-screen ventures are all part of ATG's strategy to capitalise on the film world's increased interest in the West End. The past few years have seen an ever-accelerating influx of Hollywood film stars into London theatres. Kathleen Turner, Darryl Hannah, Macaulay Culkin, Jessica Lange, Nicole Kidman, Kevin Spacey, Juliette Binoche - the list goes on and on - have all trod the boards in the capital over the past few years. ATG is one of the most powerful theatre owners in the UK, with nine West End venues and dozens of regional powerhouses in its empire.

Law and McGregor - now best known internationally for films such as, respectively, The Talented Mr Ripley and The Phantom Menace - both started their acting careers on stage and are keen to get back to their theatrical roots. Most recently, McGregor made his first stage appearance in seven years in 1998/99's Little Malcolm and His Struggle against the Eunuchs, which transferred from the Hampstead Theatre to the West End, and Law starred in 1999's 'Tis Pity She's a Whore at the Young Vic.

In a press conference held today at London's St Martin's Hotel, the actors denied that Natural Nylon Theatre really was a retaliation against American stars in London. "This is purely an attempt to do some good theatre," said McGregor.