Maths graduates are to be offered £20,000 to teach in colleges.
Grants of around £9,000 will be available to would-be college English and special educational needs (SEN) teachers, according to the Department for Business, Innovation and Skills (BIS).
Ministers said the move was part of a bid to improve the numeracy and literacy skills of those studying vocational courses at further education colleges.
It comes amid concerns by businesses about finding employees with good levels of maths and English.
Around 8.1 million people - 24% of the working-age population in England - lack basic maths skills, the latest official figures show, while 5.1 million (15%) struggle with literacy.
Business Secretary Vince Cable insisted that the grants will help young people acquire the skills they need to get a job.
"Too many businesses tell me they cannot find young people with the numeracy and literacy skills they need," he said.
"It's not just those planning on going to university who need to have a firm grasp of English and maths. These basic competencies are needed for all types of employment and it is not possible to enter a full apprenticeship until then."
In 2013/14, maths graduates who want to teach the subject in colleges will get £20,000 towards their initial teacher training, while those planning to teach English or specialise in teaching SEN students could get £9,000.
Skills Minister Matthew Hancock said: "These bursaries will help us recruit the brightest and best teachers so we can improve standards and provide people with the basic skills they need for a rewarding career.
"They will also make sure that we promote excellence in special needs teaching so that we protect members of our society that are potentially the most vulnerable."
Joy Mercer, policy director at the Association of Colleges, said: "We are very pleased that Government is boosting funding for teacher training within the further education sector.
"New bursaries will help Colleges attract graduates so that they can support the many thousands of students who leave school without a GCSE Maths and English A-C grade every year.
"£1m in new grants to support professional development for those already working with students with special educational needs is equally welcome.
"Speed and longevity are of the essence - it is useful that Government has committed to initial teacher training grants for 2013/14 graduates so that Colleges can start recruiting straight away, but funding has only been confirmed for the next two years and a short-term funding commitment risks limiting the benefits."Suggest a correction