A selection of confiscated criminal assets from a police warehouse
The public are being asked to suggest how £4m raised from the sale of assets seized from criminals should be spent.
The Home Office's new Community Cashback scheme is inviting people in 42 areas in England and Wales to vote online for where the money should go.
The money has been raised through the sale of assets, such as yachts and cars, confiscated by police.
The government has revealed £148m in assets was seized from criminals using the Proceeds of Crime Act last year.
The previous year the equivalent of £136m was seized in England, Wales and Northern Ireland.
Home Office minister Alan Campbell said that seizing money was a "valuable tool in the fight against crime".
Under the Community Cashback scheme, 42 Local Criminal Justice Boards will be invited to bid for up to £95,000 each.
People can use a website to suggest projects in their area they want to see money spent on or to support projects put forward by others.
A similar scheme already operates in Scotland and one is just starting in Northern Ireland.
Mr Campbell said: "Not only does it show that we're taking assets off the Mr Bigs of the criminal world, but actually we're putting something back into the local community.
"That's what local people are telling us. They don't want people to get away with criminality, but they also want to see the benefits coming back into local communities.
"We certainly want to see more criminal assets being seized, it's a very important tool in the fight against criminality."
Shadow home affairs minister James Brokenshire said the proposals seemed like "yet another hollow government promise".
He added: "This week the government admitted that it spends £15 to recover £1 from criminals.
"The government should be concentrating on recovering the proceeds of criminal behaviour and on cutting police bureaucracy to get the police back on our streets."
Liberal Democrat shadow home secretary Chris Huhne said: "Dirty money should go into preventing crime.
"A good candidate would be youth projects in deprived areas to ensure that young people are diverted away from a life of crime."
Until now money recovered from criminals has gone to frontline services such as the police and criminal justice system.
A further £7m is to be shared between all police forces in England and Wales.