Speaking at a conference in London today, Grayling said the capacity expected to be delivered by the proposed high-speed rail link was needed "now more than ever".
Grayling said there was an urgent need for a new high-speed, high capacity railway line to give Britain the infrastructure it required.
"We’re facing a rapidly approaching crunch-point," he said.
"In the last 20 years alone, the number of people travelling on our railways has more than doubled and our rail network is the most intensively used of any in Europe.
"We need HS2 for the capacity it will bring on the routes between London, the West Midlands, Crewe, Leeds and Manchester as well as the space it’ll create elsewhere on our transport network".
"We need this railway, and if we’re going to build it, let’s make it state-of-the-art, fit for the decades of growth ahead so that in 2033, we no longer have a rail network with a Victorian heart, but a network with an Elizabethan heart, able to deliver everything we expect of a 21st century transport system."
Grayling said ministers were "on the cusp" of announcing the route for phase two of the line, which would extend from the West Midlands to Manchester and Birmingham, while work on phase one would start next year.
The £70 million in funding Grayling announced comes from the HS2 Community and Environment Fund (CEF), the Business and Local Economy Fund (BLEF), and a fund for road-safety improvements along the line.
The DfT said a combined £40 million would be allocated via the CEF, which aims to support community projects, enhance access to the countryside and conserve nature, and the BLEF, which aims to minimise disruption to local businesses by the construction of HS2.
It gave no indication of the balance between the two cash pots, but said that regionally £15 million was being made available to communities in Staffordshire, Warwickshire and Buckinghamshire; £7.5 million for Greater London; £7.5 million for Birmingham, Solihull and Coventry; and that the remaining £10 million would fund cross-border or route-wide projects.
The DfT said community groups, charities, non-governmental organisations and business support specialists would be able to bid for grants from the funds and that guidance would be published "in due course".
It said details of the £30 million road-safety fund, which would target traffic-calming measures, junction improvements, and better pedestrian crossings in connection with work on the first phase of HS2 would be announced later.