More than 100 local authority areas in England are to benefit from the funding, which will be allocated by local strategic partnerships within the framework of local area agreements where these exist.
The ODPM wants local councils and partners to recognise the contribution the voluntary and community sector can make, not only in identifying local priorities but also in delivery. It says that voluntary sector groups will, in some circumstances, be able to get funding through engagement with the local strategic partners.
An ODPM spokesman said: "The voluntary sector should engage through the local strategic partnership. That will enable it to influence decisions about how the money is used, which may deliver what it wants rather than provide it with funding directly.
"It will also be a way for it to have some say in how the funding is used to support or develop the voluntary and community sector locally."
At the announcement of the programme last week, Phil Woolas, minister for local government and neighbourhood renewal, said: "We don't know exactly how much money will go to voluntary organisations, but the local strategic partners do have a requirement to have voluntary sector engagement.
"We don't force it because it would be counterproductive, but we do cajole.
"The evidence is that it requires the voluntary sector."
The funding package is aimed at improving the overall quality of life for people living in disadvantaged areas. The money comes from two sources: £1.05bn from the Neighbourhood Renewal Fund, over two years, and £265m from the Safer Stronger Communities Fund for communities across England.
The SSCF has two elements: the Neighbourhood one of £160m over four years, targeted at local authorities that have pockets of deprivation in small neighbourhoods; and the Cleaner Safer Greener element of £105m for two years, targeting council districts that need to improve public spaces.
The Office of the Deputy Prime Minister has announced a £1.3bn community improvement programme to find ways to make life better, such as cracking down on crime
More than 100 local authority areas in England and Wales will benefit
They will be required to work with voluntary sector organisations.