Ministers want philanthropists, charities and other organisations to invest cash into projects which help to tackle anti-social behaviour, crime and addiction.
In return for putting cash into a Social Impact Bond, investors will be paid a dividend for any successful project.
The Government expects to raise up to £40 million across pilot schemes in Hammersmith & Fulham, Westminster, Birmingham and Leicestershire, which are expected to be up and running early next year.
Civil society minister Nick Hurd said: “We must not be afraid to do things differently to end the pointless cycle of crime and deprivation which wrecks communities and drains state services.”
Projects will be judged successful if families are taken out of deprivation and long-term dependence on the state, according to the Government.
Official estimates put the public service bill for the 46,000 most deprived families at more than £4 billion a year, around £100,000 per family. That covers the bill for a wide range of services including police, courts, drug rehabilitation and foster care.
The new trial is the first to tackle multiple problems within families and follows on from earlier Social Impact Bond projects to tackle re-offending and support to prevent children being put into care.