The graduate internship programme, which is being promoted by the Federation of Small Businesses, will support small businesses to take on - and get the best from - a graduate intern. It is hoped this could help as many as 7,000 graduates find work.
Graduates will receive practical assistance before, during and after their internship, including mentoring, pre-employment and interview training, and CV workshops.
The prime minister, Gordon Brown, welcomed the partnership between the Federation of Small Businesses, the Government and universities across the country. He said: "We are committed to supporting young people as they develop in their careers, which is why we have invested over £13 million in new internships and in the training and mentoring of people taking them up.
"By Backing Young Britain and working with small businesses through these difficult times, we can help ensure that we secure sustainable economic growth for the future."
In England, more than 50 universities will support graduates and small businesses, as they provide a total of 6,998 internships by the end of this year, rising to 8,500 after that.
Through the internship programme, small businesses will get financial support to take a graduate intern (around £1,300 in wage subsidies on average) and have access to a national, single point of contact for advice in getting a graduate intern.
Business secretary Lord Mandelson added: "The fact that this scheme has become so successful speaks volumes for the hard work and dedication of UK businesses, which are putting their faith in the workers of tomorrow.
"We need skilled people of all ages to hit the ground running when they begin work, and these internships give them the perfect base from which to start. There is still over £2 million available, and I would encourage all universities to become involved."
Interns under this scheme will be placed with small business and businesses in the Government's priority areas, including low-carbon products and services, the digital industry, life sciences and pharmaceuticals, advanced manufacturing, professional and financial services, engineering, construction and industrial opportunities.
