The Capital Volunteering project, run by CSV and funded by the Treasury and Cabinet Office's 'invest to save' initiative, plans to attract 10,000 volunteers in London over three years. It will be based in two London boroughs before extending to nine more.
Dame Elisabeth Hoodless, executive director of CSV, said: "We intend that support from a buddy and other members of the community will enable mental health service users to live continuously independently."
Buddies will be expected to be available at weekends and evenings to offer advice and support, and share social activities.
CSV wants to recruit the first volunteers to the project by this autumn and it hopes to appoint a project director by July.
The grant will come in two stages. CSV expects to receive £2.6m shortly, while an additional £4.7m will be handed over when the Government is happy that the project fulfils its 'invest to save' criteria.
"This project will be judged on whether people are seeing an improvement in their mental health and if it ultimately lowers the cost of services they rely on," said Barbara Williams, CSV's UK director of volunteering partners.
The project aims for 25 per cent of volunteers to be mental health service users themselves, which will strengthen their community links, help them regain self-respect and get back into work.
"We need to set up safeguards and instil confidence in people that this will work," said Williams. "We think it will help people to get better and stay better."
The project will be loosely based on CSV's Linden Project in Newcastle, which has successfully used buddies over the past few years. The London Development Centre for Mental Health, which is part of the National Institute for Mental Health, will partner CSV in the scheme.