A new £15m fund will be made available for councils to provide safe accommodation for people suffering mental health crises in public spaces.
The police are often forced to place vulnerable people in prison cells overnight because of a lack of local authority-run safe spaces.
The Department of Health has announced the new funding will be made available to improve existing health-based places of safety or to provide new ones.
Figures released by the Metropolitan Police last January show that over a period of six months, more than 3,000 under-18s were held in cells overnight in London alone.
There was, according to Government figures, a 32% reduction in the use of police cells between April 2013 and March 2015.
Health secretary Jeremy Hunt said: ‘Mental illness is not a crime - we want to end the scandal of people in crisis being unnecessarily locked up in a police cell.
‘This funding will mean local areas can invest in creating safe places so people get the best support.’
Home secretary Theresa May said: ‘This funding will ensure there are alternatives to police cells available right around the country because nobody wins when the police are sent to look after people experiencing a mental health crisis – vulnerable people don’t get the care they need and deserve, and the police can’t get on with the job they are trained to do.’