It is hoped the expansion will allow for as many as 60-70,000 referrals to the scheme each year.
Employment minister Chris Grayling (pictured) has also warned the system of sanctions is being tightened to make sure people can't just sign off Jobseekers Allowance (JSA) and sign on again a few weeks later in order to avoid their placement.
The news comes after official figures and analysis of the early impact of the scheme revealed nearly half (46%) of the first jobseekers referred to do a month's full time activity under the Mandatory Work Activity scheme either signed off Jobseekers' Allowance or failed to turn up rather than starting the placement. Those failing to turn up face losing their JSA.
Of those early referrals 29% signed off JSA over the 21 weeks following the referral instead of starting.
Between May 2011 and February 2012, 16,790 people started a Mandatory Work Activity placement. The extra funding will allow for 9,000 extra places a year.
Grayling said: "People need to be aware that for those who are fit enough to work it is simply not an option to sit on benefits and do nothing.
"We've found that a month's full time activity can be a real deterrent for some people who are either not trying or who are gaming the system. But we're also fighting a battle to stop claimants slipping back into the benefits system by the back door.
"That's why for the extended roll out of Mandatory Work Activity we will toughen up the sanctions regime and make sure that anyone re-claiming JSA will have to complete a full placement or face a further sanction."
Claimants failing to complete a placement already face losing JSA for three months for a first offence, and six months for a second offence. A tougher sanctions regime will start later in the year.
Mandatory Work Activity helps jobseekers who have demonstrated a need for additional support to gain work related disciplines or a need to re-engage with their search for work. Placements usually last four weeks and jobseekers are referred by Jobcentre Plus advisers. Placements aim to instil disciplines such as attending on time, regularly carrying out specific tasks and working under supervision.
Claimants who participate are expected to complete placements, which are of benefit to the community, including helping charities or environmental projects.