Health and local authorities are to be allocated an extra 70.5m to provide new treatment services for drug misusers and young people at risk.
Chancellor of the Duchy of Lancaster Jack Cunningham announced on Tuesday that the money will form part of an extra 217m of government spending over three years on a 'treatment works' approach to drugs abuse.
The announcement confirms a change of emphasis for the government away from spending on law enforcement and towards treatment and prevention.
This switch was first indicated in its white paper, Tackling Drugs to Build a Better Britain, which said there would be a 'progressive shift' from 'reactive' expenditure to 'investment' to prevent problems arising.
The new money will be tightly tied to specific outcomes, with cost-effectiveness monitored locally by 106 drug action teams and nationally by 'drugs tsar' Keith Hellawell, who will report annually to government.
Mr Hellawell emphasised that the money would be spent on 'treatment proved to work.
'This is not just about talk and conselling services. It is a whole raft of treatment facilities in the community and the criminal justice system,' he said.
The government's announcement was welcomed by the Standing Conference on Drug Abuse, although it warned the money might be 'insufficient to match growing demand'.
Chief executive Roger Howard said SCODA would also have expected to see a more 'significant' shift in resources on the back of the government's white paper commitments.
Last year 62 per cent of the 1.4bn spent on drug problems was spent on enforcement measures, 13 per cent on treatment and rehabilitation and 12 per cent on prevention, according to SCODA.
It estimates 61 per cent of Tuesday's cash will still be spent on enforcement and 32 per cent on treatment and rehabilitation.