Care services minister Paul Burstow said the money will be used to support the creation and running of personal health budget pilot sites.
Personal budgets allow NHS trusts to put money in the hands of individual patients to choose how, where and from whom they receive their healthcare.
Mr Burstow said: 'I am fully committed to piloting personal health budgets to inform the way we implement them more widely and how we can combine them with social care budgets.
'We want to give people more choice and influence over their healthcare - giving them direct control of the cash is a powerful way of achieving this.'
A similar scheme had been a 'huge success' in social care, letting people choose services that fit in with their life, rather than fitting their life around the service, said Mr Burstow.
He added: 'Evidence has shown that people spend less on better things for themselves, proving that individuals can be better guardians of the public purse than institutions, while at the same time ensuring services suit people's individual needs.'