Thirteen projects to encourage enterprise among people with mental health conditions are to be set up using £1.25m of Department of Trade and Industry funding.
The projects, based throughout England, will help people with mental health problems become self-employed and start small businesses or social enterprises through mentoring, training, advice and hands-on support.
The projects will be funded by the Phoenix Fund, the £177m DTI programme set up to tackle social exclusion by encouraging entrepreneurialism.
Nigel Griffiths, the minister for small business and enterprise, said: "A large number of people with mental health issues aspire to work, but many fear that employers will have little understanding of their situation.
"We believe that, for some, setting up their own business would be a viable alternative. It's clear from the sheer volume of interest we received in this programme that those who work in this field agree with us."