Introduction The purpose of this study was to enhance the prac experience of undergraduate nursing students and registered nursing staff. An innovative model of clinical education, the Clinical Education Unit (CEU) model was developed, implemented and evaluated. Background to the study Clinical education is a vital component of the undergraduate nursing curriculum. 'Real world' practice provides students with the opportunity to develop the knowledge, attitudes and skills needed to function effectively as a registered nurse. Despite the commitment of universities to produce competent graduates, there has continued debate regarding the preparedness of new graduates for practice as registered nurses. This has focussed continued attention on the adequacy of students' clinical education and, in particular, on the models used for clinical facilitation/supervision. There is little published evidence that clearly demonstrates the effectiveness of any of the current models of clinical education or that any particular model is better than any other in achieving quality outcomes (Wellard, Williams and Bethune 2000; Clare, White, Edwards and Van Loon 2002). Hence, as recommended in the recent National Review of Nurse Education (2002), ongoing evaluation of nursing curricula and teaching practice, including clinical education, is clearly warranted. Methods The study utilised action research methodology to examine the effects of the Clinical Education Unit (CEU) on the quality of clinical prac as experienced by undergraduate nursing students and registered nurses working with the students in wards where they were placed for their practicums. It was undertaken in two iterations or phases: Phase 1 - Development, implementation and initial evaluation of an innovative model of clinical education (the CEU model) and Phase 2 - Refinement and re-evaluation of the CEU model of clinical education. Using focus group discussions and survey questionnaires, qualitative and quantitative data were collected from undergraduate nursing students and clinical nursing staff in conjunction with each iteration of the study. Results Phase 1 results indicated that the CEU model was evaluated more positively by students and registered nurses than were the non-CEU models that were used for comparison. This result was demonstrated in the comments of students and registered nurses with regard to the respective models of clinical education and supported by their ratings of the quality of clinical experience through the QPE-Phase questionnaires. A similar trend was found in the results from Phase 2. The CEU-2 model was again evaluated more positively by students and registered nurses than were the non-CEU models that were used for comparison. Conclusion In summary, the results of this study indicate that the CEU model had a positive impact on the prac experience of students and registered nurses. In both phases of the study, students and registered nurses in wards where the CEU model was being used evaluated the prac experience more positively than did students and registered nurses in wards where non-CEU models were being used. Two key factors were found to be important in achieving this outcome: the collaborative nature of the CEU model and nursing staff ownership of students' clinical education. These factors provided an operating framework which enabled the development of positive learning environments in the wards where students were placed for prac. Equally important were arrangements for the supervision of students' practice which involved local clinical facilitation and the explicit inclusion of other nursing staff in the ward. Further, continued support from the university to allow the clinical facilitators to take a supernumary role when facilitating students, to provide staff development for clinical education and to support staff on a day-to-day basis during the prac was also important, if not essential. It is proposed that these factors, acting synergistically, promoted enhanced access to learning opportunities for students and improved learning outcomes for students and staff. The study makes an important contribution to nursing education by providing evidence that can inform future developments in the area of undergraduate clinical education. It has potential benefits for nursing education not only in the local context, but within the international arena as well.