The cash will go towards the Tackling Knives Action Programme (TKAP), launched last year and being piloted in ten areas.
As well as funding another 12 months of the project, the cash will see the initiative expand into Kent and Hampshire.
Home Secretary Jacqui Smith said: "We all need to stand shoulder to shoulder to get knives off our streets and protect young people from knife crime."
The Home Secretary also announced that Keith Bristow, Chief Constable of Warwickshire Police and Association of Chief Police Officers' (ACPO) lead for violence and public protection, will lead TKAP as it moves into the next phase.
He takes over from Deputy Assistant Commissioner Alf Hitchcock who is taking up a new position at the National Police Improvement Agency.
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