Mental health nurses will be stationed at nearly 50 police stations across England and Wales by next month.
Ten forces - including the Metropolitan Police Service and Leicestershire Constabulary - will operate Liaison and Diversion schemes from April, policing minister Damian Green has announced.
Police officers and custody suite staff will be able to refer vulnerable people who they suspect have mental health needs for assessment and referral for appropriate treatment. It is expected the programme will be rolled out across the country by 2017.
Mr Green said: " When someone is suffering a mental health crisis, the police are often the first to arrive on the scene.
"While the police cannot and should not provide the necessary medical support and treatment, they need to be able to recognise mental health issues and deal with them appropriately.
"The police also need their health partners to be ready to step in and provide medical support for people in crisis.
"There has been a real commitment among national health and policing leaders to change the way people with mental health needs are treated and a lot of positive progress has already been made.
"However, we still face challenges to improve how the police respond to people in crisis and I am encouraged to see how many police forces are agreeing new ways of working with health professionals, making the most of government funding provided to schemes such as Liaison and Diversion and street triage."
The Home Office is also working with police chiefs across England and Wales, the Metropolitan Police and the College of Policing to put together a training plan for officers to quickly identify people with mental health needs.
Nine government-funded mental health "street triage" schemes, which involve mental health professionals working alongside police officers to assess people's needs at the first point of contact, are also up and running.
In Sussex, where street triage was launched five months ago, the number of people with mental health needs taken into custody between October 2013 and January 2014 fell to 15 compared with 37 in the same period a year earlier.
Care and support minister, Norman Lamb, said: "Too often people with mental health illnesses who come into contact with the criminal justice system don't get the support and treatment they need as quickly as they need it.
"That's why in January we announced £25 million for liaison and diversion services at police services and courts across the country.
"This will help to move people away from offending and reduce the risk of more victims suffering due to further offences.
"This scheme, alongside our street triage programme and our newly agreed Crisis Care Concordat, will ensure people who are in crisis are treated with care and compassion and given the support they need."