Communities Secretary John Denham has announced a new fund to help faith groups which work with the government.
Speaking at a conference about faith and social action, Mr Denham said the groups would be able to bid for funds of £1.2 million to be made available after the general election.
There will be an additional £50,000 in prize money for the best innovative faith project.
Mr Denham told the conference: "Faith groups have a unique perspective which must be recognised by government and local councils and this is especially important at a time when public services are under financial pressure.
"We cannot afford to overlook the innovative ways faith communities address issues. The prize I am establishing will highlight and reward the innovative ways faith groups address the challenges that arise in their communities."
Jon Benjamin, chief executive of the Board of Deputies, said: "This faith-based social action prize looks like a great opportunity to showcase Jewish social action. These organisations represent some of the most positive, outward-looking elements of our community."