Mental health nurses are to be posted in Sussex police stations and courts in a bid to reduce reoffending by mentally ill criminals.
The £25 million pilot scheme, which is to be tested in 10 areas across England including Sussex, will mean people with mental health problems are treated "as early as possible", care and support minister Norman Lamb said.
Identifying people with mental health needs who come into contact with the criminal justice system at the earliest possible stage will help to "divert" them away from offending again, Mr Lamb said.
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He said "too often" criminals with mental health problems, learning difficulties or substance misuse issues are only diagnosed once they reach prison.
The majority of people who end up in prison have a mental health problem, a substance misuse problem or a learning disability, and one in four has a severe mental health illness such as depression or psychosis, a Department of Health spokeswoman said.
Over the next year, the money will be used to join up police and courts systems with mental health services in Sussex and nine other counties.
Mentally ill people as well as those with substance abuse problems and learning disabilities, will be assessed when they come into contact with police. The information will be shared with officers and the courts system to ensure charging and sentencing decisions take into consideration a person's health needs, the spokeswoman said.
It will also mean treatment is given sooner which will help stop reoffending, she added.
If the pilot is successful, the measure will be rolled out across the rest of the country by 2017.
Mr Lamb said: "We want to help them get the right support and treatment as early as possible. Diverting the individual away from offending and helping to reduce the risk of more victims suffering due to further offences benefits everyone.
"That's why we are investing £25 million for liaison and diversion services at police services and courts across the country. These will help identify when someone in a police station or involved in court proceedings who has mental health problems are referred to the right mental health services and are given the help and support they need."