The England for Everyone fund will be used to arrange short breaks for parents, carers and youngsters beset by illness, isolation or bereavement.
The Family Holiday Charity will arrange more than 800 trips over the coming months, working in partnership with VisitEngland, which will be arranging free on-site activities.
Each trip will be worth up to £450; arrangements will include accommodation, ranging from campsites and caravans to chalets and lodges, as well as allowances towards travel and food.
Breaks will be available Monday to Friday, or over the weekend from Friday to Monday, to families who have not holidayed in the past four or more years.
Families can be referred to the charity for a trip and will have a choice of where they visit. Referees could include social workers or teachers.
Kat Lee, chief executive of the Family Holiday Charity, said: "Access to a holiday is simply out of reach for many UK families, but this scheme will see children, mums, dads and carers able to take a holiday, some for the first time ever.
"Holidays bring wellbeing and mental health benefits, and the opportunity to try new things and think differently. On holiday. families make memories that help when times get tough.
"And families who have experienced a Family Holiday Charity break are more confident, better able to engage with learning and play a more active part in their communities."