The new Education Endowment Fund (EEF) will be set up and managed by lead partner the Sutton Trust, in partnership with the Impetus Trust.
The trusts will be responsible for assessing applications for funding and allocating grants to groups with innovative proposals on how to improve the attainment of disadvantaged pupils in underperforming schools.
The EEF has been inspired by President Barack Obama's 'Race to the Top' programme, which funds trailblazing projects in American schools.
Grants will also be available to voluntary and community organisations, social enterprises, public sector organisations, charities and co-operatives.
A major part of the programme will be evaluating the effectiveness of projects that are piloted to create a range of approaches that have proved successful at improving children's attainment.
Elly de Decker, investment director at Impetus, said that the focus will now be on defining specific criteria for groups applying for funding to work with schools by looking at 'what's already having an impact, so that we can learn from what's happening already, both in the UK and abroad. We will be looking at innovative work that is already working in one area and how that might apply to another.'
She added, 'We're open to receiving applications from a wide range of groups. We will fund small local projects with direct grants and also larger organisations, perhaps working with local authorities.'
It is expected that selection criteria will be drawn up by June.
Ms de Decker said, 'We hope that by September, an initial round of funding can be confirmed so that projects can kick off in the autumn.'
The Sutton Trust is investing £750,000 in the fund and the Impetus Trust is committing £250,000.
Launching the scheme, education secretary Michael Gove said, 'I am delighted that these leaders in social mobility will take forward this pioneering new fund for our poorest children. This fund, combined with the Pupil Premium, the expansion of the academy programme, funding for more Teach First graduates and tough action to improve discipline, will help improve standards for children in our most challenging schools.'