The fund, revealed by civil society minister Nick Hurd earlier this week, will be officially announced later in the year.
A Cabinet Office spokesman said that the money will come from the Cabinet Office’s Centre for Social Action, which supports initiatives that encourage people to make positive changes through social action.
The news of the funding has been welcomed by the National Youth Agency (NYA) and UK Youth.
Bob Clifford, business development manager at NYA, said it was "excellent news that resources are being made available to the sector".
He added: “In terms of what it should focus on, perhaps one obvious answer would be to invest in long-term funding for projects and schemes that are already proven so they can continue to grow, build their body of evidence and share with and enable others to replicate what works in order to cascade programmes across the region.
“Specific themes might include focusing on young people with learning disabilities; those experiencing bullying; and those with emerging mental health issues such as eating disorders, where risk of suicide is relatively high.
“For all of these groups, mentoring and peer-to-peer support can be effective and involve others as volunteers.”
Dominic Cotton, director of communications and income generation at UK Youth, added: “Social action is at the heart of all of UK Youth’s programmes and we are delighted to see the Cabinet Office supporting it with significant funding.
“This will enable more young people to have life-changing experiences and connect with their communities.”
The Centre for Social Action has a number of funding streams, including the Youth Social Action Fund that supports social action initiatives for young people in Birmingham, Middlesbrough, Lancashire and Kent.