As part of the initiative, local areas will be able to bid for funds to build the facilities most wanted by local people, such as transport improvements, better shopping streets, libraries, museums or galleries.
During the spending review, Chancellor Rishi Sunak revealed a “levelling up” fund worth £4bn.
The fund will be managed by the treasury, the transport department and the communities department.
As part of the initiative, local areas will be able to bid for funds to build the facilities most wanted by local people, such as transport improvements, better shopping streets, libraries, museums or galleries.
Sunak said: “For too long funding for development has been complex and ineffective.
"People want to be proud of the places they call home.”
Sunak also confirmed a £7.1bn Home Building Fund and a £12bn investment for the Affordable Homes Programme.
Within the review, Sunak also outlined a predicted 11.3% slump in UK GDP this year.
This would be the greatest contraction since 1709 and larger than the near 10% fall in the aftermath of World War I and the Spanish flu epidemic in 1921.
Despite the predicted fall, Sunak said: "[The economy] is expected to grow by 5.5% next year, then 6.6%, then 2.3%, then 1.7% and then 1.8%.
"But output will not return to pre-crisis levels until the fourth quarter of 2022."
Overall, the government is set to borrow £394bn this year, which represents 19% of GDP.
According to the Chancellor, this is the highest level of borrowing in peacetime history.
Looking to national aid, Sunak has abandoned the 0.7% target and assigned 0.5% of national income to overseas aid next year.
Furthermore, Sunak noted that the government will provide a pay rise to doctors and nurses in the NHS, although pay rises to the rest of the public sector will be paused.
However, those in the public sector earning less than the median wage, £24,000, will get an annual pay rise of £250.
