Announcing the first white paper to address the issue in 30 years, Health Secretary Alan Milburn said the learning disabled would have better civil rights, independence, choice and inclusion.
It will look at employment, housing and health issues for those with learning disabilities.
Mr Milburn said for too long the learning disabled had been ignored and this must change.
"People with learning disabilities have for too long had their needs ignored.
"For 30 years forgotten generations of people with learning disabilities have lost out. That must change."
More independence
As well as a new learning disability development fund of up to £100m over the next two years they also hope to ensure more people live in the community rather than hospitals.
Mr Milburn pledged a five year programme to modernise local council day services and a £6m implementation support fund over the next three years will fund new advocacy developments.
Mr Milburn said they would also be creating a learning disability task force and a learning disability awards framework to provide a new qualification route for care workers.
Carers will also get help with a £750,000 boost over the next three years to develop a national learning disability information centre helpline in partnership with Mencap.
Mr Milburn said: "We want people with learning disabilities to have as much choice and control as possible over their lives and the services and support they receive.
"Helping people with learning disabilities to live as independently as possible within their local communities is key to improving people's lives."
There are around 210,000 people in England who have severe learning disabilities.
An extra 1.2m have mild or moderate problems.
'Poor services'
Campaigners have said people with learning disabilities often have to put up with inadequate services.
Lord Rix, president of Mencap said the government's proposals should make the future brighter for the learning disabled.
He said: "Thirty years ago, when my daughter Shelley was a young woman, we had to fight for every bit of support.
"Now, with the Government's learning disability white paper, we have a real opportunity to build services fit for the 21st century that offer genuine choice and independence for people with a learning disability."
Su Sayer, chief executive of the national charity United Response said the learning disabled need to be considered part of the workforce.
"It is time for society to move on from treating people with learning difficulties as if they are unable to work, to participate in everyday activities and have full rights as citizens.
"They have been excluded too much for too long.
"Employers are missing out on a very valuable workforce."
Hazel Morgan, head of the Foundation for People with Learning Disabilities said: "We welcome the extra resources, and the Government's focus on rights, independence, choice and inclusion, but if it is to work we must ensure that local authorities and organisations take this chance to have a fresh look at the support and opportunities that they are providing."