Residents in regional Australia can now apply for a share in $1 billion to build essential structures like bridges and childcare centres in their area.
Applications to access the Regional Development Australia Fund open on Thursday, with project allocations capped at $25 million.
Funding starts flowing from July 1, with resources to be delivered over the next five years.
Regional Australia Minister Simon Crean said the funding decisions would be based on merit, and would go to projects that had demonstrated social and economic benefits.
"We want applications for projects that stack up," he said in a statement.
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"Projects that will boost economic development, create local jobs and lift the quality of life in local communities and regions."
The $1 billion fund is part of a $10 billion package unveiled by the Gillard government in September as part of a political deal to win over independent MPs Rob Oakeshott and Tony Windsor.
The government has also set aside $350 million to rebuild regional communities devastated by the summer natural disasters.
Of the government's $10 billion investment in regional Australia, funding applications have closed for the $1.8 billion health and hospitals package.
Applications for the $500 million education investment fund are expected to open in coming months.
The commonwealth announced on Thursday it would give $25,000 grants to the 55 Regional Development Australia committees, which have a central role in applying for federal funds.
A Regional Development Australia forum is being held in Canberra on Thursday and Friday.
