City Bridge Trust said it has awarded the money to London Youth to help the clubs be more resilient, more sustainable and provide better services, amid increasing cuts to generic youth services for young people.
The funding will go towards providing sports programmes for girls and disabled young people, funding a young "City Leaders" initiative and support with research into the needs of London's youth and helping clubs find ways to better demonstrate their worth and value.
They will also be provided with fundraising support, as well as safety and safeguarding training.
A recent report by Green Party London Assembly member Sian Berry highlighted significant cuts to youth clubs in recent years, with nearly 50 per cent of full-time staff cut.
Alison Gowman, chairman of the City of London Corporation's City Bridge Trust committee, said: "As London's largest membership body for youth groups, London Youth acts as an important voice for the sector, and thousands of young people in times of major cuts.
"It is an important and highly regarded infrastructure body for hundreds of youth organisations across London and the many young people whose lives are enriched by them.
"Non-statutory services for young people have been greatly affected by cuts and continue to be under threat. The sector itself needs to maintain what it does well and to improve - and London Youth is a key organisation in enabling this.
"We are committed to making the capital a better place to live for all Londoners."
Rosemary Watt-Wyness, chief executive of London Youth, said: "This grant will enable London Youth to strengthen our members, develop the support available to them and to increase access to our sports participation and City Leaders programmes for young people.
"Our 300-plus members support tens of thousands of young people each year and with cuts of over £22m from youth service budgets across the capital since 2011, this funding has given a much-needed boost to the youth sector and the young people we work with."