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The Government funding will go to debt advice agencies, as well as 80 court desks across the country.
The services have proved their worth: 36,000 cases have been seen by the court desks over the past year, and more than 100,000 households have benefited from free advice on managing their debts from charities and councils.
Services offering free advice and representation in court have helped stop repossession in four out of five cases making use of their service, supported by extra Government funding to ensure help is available in county courts across England.
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The decision comes as pressures on repossessions are forecast to continue throughout 2010. The Government has decided to act ahead of the repossession risk next year by extending the help available.
Over the last year, over 330,000 homeowners have received help and advice with their mortgages.
New figures from the Financial Services Authority published today show there were 13,987 repossessions between July and September - five per cent less than at the beginning of the year.
Repossessions are running at half the rate of the last recession, and the Council of Mortgage Lenders has reduced their repossession forecasts for this year by well over a third - from 75,000 to 48,000.
Mr Healey said: "To ensure lenders follow the tough rules put in place, a new checklist was introduced earlier this year so lenders must prove they have exhausted every possible option before seeking court action.
"But I also remain concerned that a disproportionate number of repossession cases come from specialist lenders. That is why it's vital that the FSA's tougher regulations for lenders are introduced as quickly as possible - to ensure all borrowers are treated with the same tolerance and understanding, regardless of who their lender is. These measures combined will ensure that in all cases, repossession remains the last resort."
(CD/BMcc)
