The fund will provide £350 million of revenue funding and £210 million of capital funding over four years to council-run transport projects that support economic growth and reduce carbon emissions.
It will also fund initiatives intended to improve physical environments, tackle congestion, reduce journey times and improve access to employment opportunities.
Local authorities will be able to submit either small project proposals of up to £5 million over the fund period, or larger proposals of more than £5 million for which there will be a longer assessment process, according to the Department for Transport.
Speaking to the House of Commons yesterday, local transport minister Norman Baker said: "The Government’s vision is for a transport system that helps create growth in the economy, and tackles climate change by cutting our carbon emissions.
"The white paper sets out how we can encourage the uptake of more sustainable modes of transport at local level and the unprecedented £560 million we have allocated in our new Local Sustainable Transport Fund will support this.
"We are particularly keen to receive bids from local authorities who are in partnership with the voluntary, community and social enterprise sector, and have the support of local businesses.
"We believe that by encouraging bids in this way, we will be able to capture innovative solutions to local transport needs in all areas, rural and urban."
Other measures contained in the white paper include:
- providing £11 million for local authorities to provide cycling training to ten-to-11-year-olds
- transferring responsibility for local roads classification to local authorities
- delivering the infrastructure to enable most local transport journeys to be undertaken using smart ticketing by December 2014
- reviewing the way transport investment decisions are made to ensure the carbon implications are fully recognised
Cutting carbon, creating growth: making sustainable transport happen can be downloaded here.