Chinese farmers will get $15bn (£9.4bn; 98.6bn yuan) support to help them cope with the effects of the recent drought.
The allocation is aimed at boosting farmers' income and reducing the cost of diesel, fertiliser and pesticides, said the finance ministry.
Local authorities plan to award the money before crop planting in spring.
Officials say the dry weather has hit four million hectares (9.9 million acres) in north and south China, destroying crops.
The drought has driven up food prices, which has caused inflation and stretched household budgets.
The consumer price index increased 3.3% over last year, higher than Beijing's target.
Inflation is expected to increase again because of increased customer spending for the Chinese Lunar New Year, which takes place in early February.
Earlier this week the National Meteorological Center said most northern Chinese regions, plagued by a months-long drought, will continue to see cold and dry weather in the next week.