Children's minister Edward Timpson said he wants to see the work of the House Project in Stoke-on-Trent, replicated elsewhere due to its success in supporting care leavers to secure appropriate housing and learn new skills.
Five councils - Cheshire East, Islington, Solihull, Staffordshire and Warwickshire - will receive cash to establish the project, with Warwickshire County Council taking the lead on the project.
Warwickshire County Council will also run a "national hub" that will gather evidence from the progamme and support other councils across England looking to run similar schemes.
Timpson said: "This significant new money will establish additional House Projects in five local authorities, as well as a "national hub" which will draw together learning from the programme and support other local authorities across the country to implement further successful schemes.
"This work is part of a wider commitment by the government to involve children, young people and families in the development and delivery of services."
Through the House Project care leavers become co-owners and managers of a co-operative company, which refurbishes empty council-owned properties that then become their homes for as long as they want.
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