The joint organisation aims to build on the work of ministerial working groups which focuses on addressing issues faced by the industry.
The sector has been hit recently by major losses, including 1,200 UK job cuts by industry giant Tata Steel.
Business Secretary Sajid Javid said: "The crisis facing the British steel industry and workers is grave indeed. But people should be in no doubt that this government has done, and will continue to do, everything that is possible to secure the future of British steel making and protect Britain's wider economy. That includes working more closely than ever with the industry in the new joint Steel Council."
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Co-chair Jon Bolton of UK Steel added: "It is a welcome step that the government is continuing to respond to the needs of the UK steel sector and has acted on calls for a longer term, business-focused Steel Council.
"The business leaders on the council represent many of the UK's producers and will be well placed to determine what steps are needed to develop and support a steel sector enabling it to meet the future UK industrial and infrastructure demands."
(LM)
