The money will fund the National Care Advisory Service (NCAS) to work with employers and councils as part of the From Care2Work programme, announced as part of the cross-government New Opportunities white paper in January.
Children's Secretary Ed Balls said: "For too long many young people have fallen into the trap of poverty and joblessness after leaving care because there was no-one to give them the help they needed. This programme will kick start their careers in a variety of industries and provide that helping hand to give care leavers the opportunity to realise their true potential."
Joyce Moseley, chief executive of Catch22, which manages NCAS, said: "Finding work is more difficult than ever in the current economic climate, and young people are some of the hardest hit. This project will provide an essential step-up into employment for young people in and leaving care."
Employers who have signed up to the scheme include Tesco, Marks & Spencer, Orange, Odeon Cinemas, Marriott Hotels and Aviva.
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