The move has been dubbed a “Brexit bribe” by political opponents who say it is aimed at trying to influence Labour MPs in Leave-supporting areas to back Prime Minister Theresa May’s Withdrawal Agreement in crunch Commons votes.
Mrs May said: “For too long in our country prosperity has been unfairly spread. Our economy has worked well for some places but we want it to work for all communities. Communities across the country voted for Brexit as an expression of their desire to see change – that must be a change for the better, with more opportunity and greater control.
“These towns have a glorious heritage, huge potential and, with the right help, a bright future ahead of them.”
The Stronger Towns Fund, launched on Monday, will be “targeted at places that have not shared in the proceeds of growth in the same way as more prosperous parts of the country”, Ministers said.
Of the £1bn being allocated using a needs-based formula, the North West gets £281m, the West Midlands £212m, Yorkshire and the Humber £197m, the East Midlands £110m, the North East £105m, the South East £37m, the South West £35m, and the East of England £25m.
Another £600m will be available through a bidding process to communities in any part of the country.
The money will be aimed at creating new jobs, helping train local people and boosting economic activity.
Communities Secretary James Brokenshire said: “We have listened to people who are concerned by momentous changes to their communities and I am determined to provide the support they need to create a more prosperous future beyond Brexit.
“This major new fund builds on more than £9bn in City and Growth Deals we have delivered since 2010 to help hard working people reach their full potential and to build an economy that works for everyone.
“I look forward to working closely with local leaders to take forward their encouraging proposals and to hear what more they propose to bring benefits to their communities.”
Shadow Chancellor John McDonnell branded the initiative a “desperate bribe”. He said: “This towns fund smacks of desperation from a Government reduced to bribing MPs to vote for their damaging flagship Brexit legislation.
“The reason our towns are struggling is because of a decade of cuts, including to council funding and a failure to invest in businesses and our communities.”
Meanwhile, EU chief Brexit negotiator Michel Barnier said he does not believe the UK will have enough time to approve Mrs May’s withdrawal deal by the scheduled exit date of March 29. Mr Barnier suggested a “technical extension” of up to two months may be needed and said agreement could not be reached by March 29.