The Government has allocated £140million to invest in cycling to help half a million children cycle safely and a generation of adults rediscover their bikes.
It is hoped the new initiative to boost cycling will help to tackle road congestion and improve air quality as well as create opportunities for exercise.
It fulfils a commitment to increase investment in sustainable transport initiatives, outlined in the recent strategy document, 'Towards a Sustainable Transport System'.
The money will be invested over the next three years and also forms part of the Government's forthcoming strategy to tackle obesity.
The money will be used to allow an extra 500,000 10 year-olds to take part in Bikeability cycle training by 2012, equipping them to cycle safely and responsibly.
It will also be used to build another 250 Safe Links to Schools, connecting around 500 more schools to the National Cycle Network.
A further 10 cycling demonstration towns - Aylesbury, Brighton, Darlington, Derby, Exeter and Lancaster with Morecombe - will be created as well as the first large cycling demonstration city, which has yet to be named.
Ruth Kelly, Secretary of State for Transport said: "Cycling brings many benefits, both for the individual in terms of health and fitness and for the local community as it helps tackle congestion and improve local air quality.”
The funding will go to Cycling England, the body set up by Government to promote cycling.
Its chairman, Phillip Darnton, said: "The bicycle really does have a role in helping meet England's transport challenges.
"It is now taking its place as a proper mode of transport."