Up to €1 billion ($1.1 billion) will be made available initially to ease the phasing out of power stations fired with coal, according to an outline document approved by the cabinet in Berlin on Wednesday.
Projects will be funded at locations where coal plays a significant role in the local economy.
In addition, funding amounting to €90 million will be made available to the area around Helmstedt in the state of Lower Saxony where lignite was mined in the past.
By passing the outline paper, the government is initiating moves to support regions affected by the phasing out of coal as a source of energy as part of a shift from fossil fuels to renewable resources.
Coal-mining regions in the states of North Rhine Westphalia, Brandenburg, Saxony and Saxony-Anhalt have been pledged a total of €40 billion by 2038, by when Germany aims to cease coal-fired power generation.
The states have submitted lists of projects to the federal government.