Care Services Minister Paul Burstow said £60m will be allocated to help improve the quality of care for people nearing the end of their lives.
The funding – which is open to all adult and children's hospices in England – will help improve care for patients and families by enhancing the hospice environment, as well as supporting the care hospices provide to people in their own homes.
Sarah Wootton, CEO of Compassion in Dying said:
"By enabling more people to receive hospice care at home, this extra funding will go a long way to ensuring more people have, as far as it is possible, good deaths.
"Hospices provide an invaluable service to many people in their final days and weeks, and we hope this extra funding will allow them to provide excellent end of life care to many more people in the care setting of their choice.
"Going forward, we hope that the excellent level of care provided by hospices can be replicated not just at home but in hospitals and care homes."
Hospices will be able to apply for funding to develop their facilities, including transport, outreach, day therapy, and bereavement facilities.
Projects must deliver improvements that directly benefit patients and provide value for money to be eligible to apply for funding.
"We are making this investment because we want hospices to be able to provide dignified, compassionate, high quality care and support to people and their families at what is a difficult time in their lives," Mr Burstow said.
David Praill, Chief Executive of Help the Hospices, said:
"In these challenging times, investment in hospices is vital so they can modernise and expand in order to meet the growing needs of the communities they serve.
"This new grant programme will make a huge difference to the quality of care that hospices provide to people with terminal and life-limiting illnesses at home and in hospices.
"Developing physical hospice environments as well as outreach services to support people at home will mean that that people nearing the end of life can have greater choice over where and how they are cared for, allowing them greater dignity and more independence."