The move, revealed by Priti Patel at this week's Conservative Party conference, aims to expand a specialist support service to help young people and their families escape this type of criminal behaviour.
County lines involves gangs from major cities that extend their operations to smaller towns, often using violence and exploiting children and vulnerable young people to sell drugs.
In her speech to the conference, Patel said the funding package would stop gangs "terrorising our towns and villages and exploiting our children".
She said the extra money will be used to grow the National County Lines Co-ordination Centre to increase its capacity at regional and national level to disrupt county lines activity.
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The centre would employ extra officers and other staff, and additional strategic resources would be given to regional organised crime units.
Since its launch a year ago, the centre, which houses a multi-agency team including experts from the National Crime Agency, has made more than 1,800 arrests and safeguarded 2,400 vulnerable people, of which more than 1,000 were children.
Dedicated teams from the British Transport Police will also be based at railway stations across England, earmarked as key hubs for county lines drug trafficking.
Investment will also be made in automatic number plate recognition to proactively target vehicles suspected of being used in county lines activity.
The government said it would step up operations to seize cash and make arrests for money laundering by increasing action against money service bureaus involved in illegal activity.
The government's extra investment in county lines follows the launch of a research project to find better ways to protect vulnerable children from the threat of county lines drug dealing.
Funded by the Economic and Social Research Council, the four-year study will examine how local authority social care systems can improve their safeguarding work with vulnerable children.