Thirty-five pilot projects would start later this year, involving partnerships between schools, colleges, local authorities and training and enterprise councils.
The move, designed to "turn on" 14 to 16-year-olds to the worlds of work and school, build on a string of schemes under which school children have been offered regular classes at FE colleges, or experience in the workplace.
Ministers are keen to promote work experience as well as vocational education for school-age children.
Initially Pounds 1.5m will be used to set up the pilots, but a further Pounds 2m will fund up to 40 local authority projects to develop work-related education. Ministers hope to focus efforts on disadvantaged areas and under-achieving young people.
Other aims of the project include developing a new national record of achievement and promoting specialist education in areas such as technology.
The new examinations super-quango, the Qualifications and Curriculum Authority, which took over from both the School Curriculum and Assessment Authority and the National Council for Vocational Qualifications at the start of the month, will also work to develop courses.
The move echoes the increasing use of colleges to educate the under 16s. Ministers are pressing ahead with the reform of qualifications for 16 to 19-year-olds, but pressure is increasing to look at the merits of a full 14 to 19 system.
Education minister Baroness Blackstone said: "There are some very able people who fail to see the relevance of school. Others can become increasingly frustrated when faced with an essentially academic curriculum which does not fully meet their needs. We hope these projects will appeal to both kinds of pupils and enable them to acquire and develop the key skills which are vital to their employability."
A report on the pilots is due by November next year to help the Government develop future policy.