Housing minister Grant Shapps said the Community Right to Build would put the power to grant planning permission firmly in the hands of communities.
Communities will be able to approve local developments without having to go through the normal planning application process.
There are caveats, however.
Proposals will have to meet certain criteria and receive the support of more than 50% of voters in a local referendum.
Full details - including how to apply - can be found here.
The Right to Build can be used for whatever communities need to make their neighbourhoods prosper. It can include:
* family houses to sell or rent
* community halls
* homes designed specifically to meet the needs of older people
* children playgrounds; and
* shops and business facilities
Areas looking to start their own building projects will be able to apply for a share of £17m.
In addition, an 'early bird bonus' of up to £2,000 will be paid to those that move quickly and get their plans in by the end of March next year, said Mr Shapps.
"For too long communities have had to use their energy fighting development they didn't want rather then putting it to use bringing about the homes, shops and facilities they did.
"The Community Right to Build completely changes that and puts communities in the driving seat by ensuring they can bring about the development their neighbourhood needs."
Funding and advice service being offered would provide a big boost to those communities eager to take up their Right and bring about change to their area, said Mr Shapps.
"I would urge all communities to make use of this support to ensure they have the best chance to thrive in the future."
Advice and support is included on new website launched by community charity Locality.
It is being supported with a helpline, seminars and detailed one-to-one mentoring for those looking to use their Right to Build.
Locality chief executive Steve Wyler, said: "The new Community Right to Build presents incredible opportunities for people to have a greater stake in their area.
"If you can see the potential of new buildings for community benefit we're here to help, support you through the process and make things happen, enhancing local pride and prosperity."
The fund will be run by the Homes and Communities Agency.
Agency chief executive Pat Ritchie said funding would support local groups who wanted to take forward locally-backed development which would ultimately benefit the whole of their community.
"The Community Right to Build is an innovative new way of empowering local communities, enabling them to play a more active role in shaping their area."
The £17m fund will be available over three years from 2012 to 2015.