The English Football League will share £2.25 million over three seasons with clubs that give young, domestic talent the chance to play in the first team.
This season, 8% of all appearances in the EFL have been made by English players under the age of 21, while 14 of England's Euro 2016 squad spent time in an EFL academy.
The 'EFL Futures' plan will financially incentivize clubs to give even more chances to English U21s, with Cardiff and Newport being rewarded for promoting Welsh talent.
Speaking at a launch event in London, EFL chief executive Shaun Harvey said: "We believe the successful introduction of young English players will not only benefit the EFL as a competition and its 72 clubs, but also the wider game.
"We are determined to do what we can to help the nation fulfil its footballing potential.
"This is just the beginning. We will now work ceaselessly to secure further commercial support and work closely with clubs to maximise the options available."
Funded by a 1% levy on transfers for young players, the EFL Futures pot is worth £750,000 a season, with clubs sharing the money on a pro rata basis.
So far this season, League One's Coventry City is leading the way with 78 qualifying appearances, with Swindon Town and Crewe Alexandra next on the list with 45 and 44 appearances, respectively.
League One and Two clubs will benefit the most from the scheme, as £300,000 has been ring-fenced for each of them, while Championship clubs will share £150,000.
Charlton Athletic manager Karl Robinson, who nurtured the likes of Dele Alli during his stint as MK Dons boss, welcomed the scheme, saying it "can only benefit this country's football".
"There is so much talent out there that just needs a chance - this could help," Robinson added.
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"Young players have never let me down. They make mistakes but they have never let me down. They have such enthusiasm for the game, they just need the opportunities."
