Councils that back fracking will get to keep more money in tax revenue, David Cameron has said as he urged opponents to "get on board".
The prime minister said English local authorities would receive all the business rates collected from shale gas schemes - rather than the usual 50%.
In a visit to a Lincolnshire fracking site, he predicted the process could support 74,000 jobs and reduce bills.
But Greenpeace accused ministers of trying to "bribe councils".
Mr Cameron's announcement on business rates came as French company Total confirmed plans to invest about £30m to help drill two exploratory wells in Lincolnshire. It is the first major energy firm to invest in fracking in the UK.
The British Geological Survey estimates there may be 1,300 trillion cubic feet of shale gas present in the north of England.
But the process to extract it - called fracking, which is short for "hydraulic fracturing" - has led to protests, with environmentalists fearing the technique could cause small earth tremors, water contamination and environmental damage.
On Monday protesters at the Barton Moss fracking facility in Greater Manchester climbed on to lorries entering the site.
But Mr Cameron argued that the UK had the "strongest environmental controls" and pledged: "Nothing would go ahead if there were environmental dangers."
"Shale is important for our country," he continued. "It could bring 74,000 jobs, over £3bn of investment, give us cheaper energy for the future, and increase our energy security.
"I want us to get on board this change that is doing so much good and bringing so much benefit to North America. I want us to benefit from it here as well."
Fracking involves drilling deep underground and releasing a high-pressure mix of water, sand and chemicals to crack rocks and release gas stored inside.
Whitehall officials said the business rates commitment would mean councils keeping up to £1.7m extra a year from each fracking site.
Separately, the mining industry has pledged to give communities £100,000 for test drilling and a further 1% of the revenues if shale is discovered, they added.
Energy minister Michael Fallon said councils could benefit by up to "£10m per wellhead" if shale gas was successfully extracted in their communities, through the 1% levy on revenues.
The Local Government Association, which represents councils in England, said the announcement was a "step in the right direction" but any packages had to "fairly remunerate" those affected.
"One percent of gross revenues distributed locally is not good enough; returns should be more in line with payments across the rest of the world and be set at 10%," a spokesman said. "The community benefits of fracking should be enshrined in law, so companies cannot withdraw them to the detriment of local people."
Responding to the LGA's call for 10% of revenues, Mr Fallon said: "This is something obviously the industry will keep under review."
For Labour, shadow energy minister Tom Greatrex said it was right for communities to share in the potential rewards from shale gas, but he called on the government to "get its priorities right".
"Only by fully addressing legitimate environmental and safety concerns about fracking with robust regulation and comprehensive monitoring will people have confidence that the exploration and possible extraction of shale gas is a safe and reliable source that can contribute to the UK's energy mix," he said.
Friends of the Earth's Jane Thomas argued that the new policy "highlights the depth of local opposition to fracking and the desperate lengths ministers are prepared to go to try and overcome it".
'New North Sea'
Lawrence Carter of Greenpeace added: "Having had their claims that fracking will bring down energy bills and create jobs thoroughly discredited, the government is now resorting to straight up bribery to sell their deeply unpopular fracking policy."
The Institute of Directors welcomed the move on business rates, with chief economist James Sproule arguing: "Investment from Total is a vote of long-term confidence in the UK shale industry, and is a welcome sign that the government is creating the conditions necessary to maximise the potential benefits of a new domestic energy source.
UKIP energy spokesman Roger Helmer warned that "all the financial benefits [of fracking] could be swallowed up by bureaucracy" and urged the government to create a sovereign wealth fund so that fracking profits "would ensure financial security for future generations".