The scheme will greatly expand the use of surveillance cameras to combat crime and could lead to residents helping to set up monitoring schemes in their neighbourhoods, particularly in small towns.
However, civil liberty groups are concerned about the rapid growth in monitoring by closed-circuit television cameras - usually by private security guards - and fear it could lead to police secretly recording lawful activity. Retailers have questioned whether the schemes are an effective way to cut crime and have called for a code of conduct to be introduced.
Groups and local authorities are being asked to compete for the Government's pounds 2m by drawing up proposals for schemes involving closed- circuit television. The winners, who must obtain the support of the police and the local community, will have to match the amount of Home Office money, probably from local authority funds and business sponsorship.
Only places where there is a serious crime problem and where a substantial number of people live or work will be considered. These include car parks and shopping centres. The Home Office will favour projects set up in small towns by neighbourhood-watch groups.
Michael Howard, the Home Secretary, made the announcement as he opened the International Police Exhibition and Conference at Olympia in west London. He said: '(Closed-circuit television) will help to reduce the fear of crime and will make our communities safer places in which to live and work.'
He highlighted schemes in cities such as Newcastle upon Tyne, where crime has dropped by 19 per cent since city-centre surveillance was introduced.
Andrew Puddephatt, general secretary of Liberty, called on the Government to introduce legislation to ensure the cameras were used only for crime detection and prevention.