It is hoped the money will help to improve services for travellers
Around £1.5m has been made available for new Gypsy and traveller sites to be set up by Wales' local authorities.
Social Justice Minister Dr Brian Gibbons said the assembly government money would help improve the quality of life and access to services.
He said a £1.7m refurbishment scheme, launched in December was already improving facilities but more needed to be done.
The Equality and Human Rights Commission in Wales welcomed the move.
Speaking at an event in the Senedd to mark the United Nations day for the elimination of racial discrimination on Wednesday, the minister said it was imperative the accommodation needs of Gypsies and travellers were addressed.
"Decent living conditions will have a positive knock on effect when accessing other essential services such as health and education," said Dr Gibbons.
"The £1.5m in funding for new Gypsy traveller sites will play an important part in improving the quality of life for Gypsy travellers in Wales.
"For the first time in nearly two decades local authorities will be able to seek funding for plans to establish new accommodation in Wales."
Wales commissioner for the Equality and Human Rights Commission, Neil Wooding, said the new money would ensure a better deal for Gypsies and travellers.
He also called on political parties in the run up to the local elections in May to work against any exploitation of prejudice in political campaigning.
"Unfortunately there is still a great deal of prejudice against members of the Gypsy and travelling communities in Wales," said Mr Wooding.
"The May local elections should be an opportunity to debate proper solutions that meet the needs of all, not exploited to rerun old assumptions and stereotypes that only leave division and yet more problems in their wake."