The new scheme aims to produce woodfuel by improving roads and access for extraction.
Forestry Commission chair Pam Warhurst said:
"There is an old phrase that says 'A wood that pays is a wood that stays'.
"We are delighted to be able to launch this new scheme to revitalise the economic viability of sustainable woodland management by helping get timber to market. It will create rural jobs and help grow the green economy."
Applicants will have to have long term management plans for the woodlands that meet the new UK Forestry Standard.
The plans will say how much timber they expect to harvest over the next decade so we will be able to see clearly what the benefits are from each new road built.
The new Woodfuel Woodland Improvement Grant (or Woodfuel WIG), will improve the infrastructure of undermanaged woodlands and contribute to the costs of marketing timber.
Woodfuel WIG is available throughout England but most of the funds are targeted towards the South East, South West and Cumbria, where there is greater potential for woodfuel supply.
This new grant is open for applications now and will operate alongside the Farming and Forestry Improvement Scheme, recently launched by Defra to provide comprehensive support to the woodfuel supply chain.