London boroughs will be given £50,000 each to decorate their streets with flags, banners and bunting for the 2012 Olympic Games.
The funds will be provided by the Mayor of London's office to help spread the "look and feel" of the Olympics.
Councils can submit their own proposals but the decorations, which need to be in the official colours of London 2012.
Mayor Boris Johnson said funds would "help us put on the best show and showcase ourselves to the world".
"We all have a duty to make the most of this opportunity and I'm determined to ensure every part of the capital gets to benefit and enjoy the Games," he added.
London 2012 chairman Lord Coe said: "Next year will be an incredible year for London and the rest of the UK as the nation comes together to celebrate the Games.
"We share the mayor's excitement and vision for one look, ensuring every resident and visitor is able feel part of the London 2012 Olympic and Paralympic Games."
A "look book" catalogue of designs and the materials the boroughs can buy will be released this summer.