The Litter Innovation Fund will support work ranging from infrastructure - such as apps and ‘smart-bins’ capable of texting refuse collectors when they are full - to behavioural research.
Some £45,000 of the money will be devoted to preventing marine litter.
Coffey said: “The Litter Innovation Fund offers a great opportunity for the most creative solutions to littering to receive funding and for us all to learn new ways of how to stop littering happening.”
All projects proposed will be assessed for effectiveness and the most successful could be rolled out more widely.
Martin Tett, the Local Government Association’s environment spokesman, said: “This new money will be a boost to councils who are trying to find new and innovative ways of tackling litter in their local area. We look forward to seeing further details on this.”
Tett said litter and fly-tipping cost some £1bn a year and urged the government to hand councils wider powers to deal with offenders.
