The funding follows a successful regional pilot, led by Norfolk police, which saw dedicated officers operating online in forums and chatrooms, to identify and disrupt offenders.
The year-long pilot led to 43 arrests and 19 people charged, nine of whom were identified as repeat offenders and 11 of those arrested were registered sex offenders. The initiative will now be rolled out across the country.
Home Secretary Amber Rudd said: "Child sexual exploitation has a profoundly devastating impact on the lives of its victims, and it's a national policing priority to take on the threat it poses.
"We believe this project has shown early promise in tackling these complex crimes through an innovative approach.
"Crime as traditionally measured by the independent crime survey for England and Wales is down by more than a third since 2010.
"However, we know that the nature of crime is changing, and through projects such as this we can help the police to adapt and develop the tools they need to respond to the challenges of the future."
Chief Constable Simon Bailey, child protection lead at the National Police Chiefs Council, said: "We are already arresting over 400 offenders and safeguarding over 500 children each month.
"This increased investment will enable us to consistently target predatory offenders intent on using the internet to facilitate their criminal behaviour and intervene earlier to prevent children being abused."