The funding was announced by the Future Cities Catalpult, which was established under the previous coalition government in 2013.
The body, based in London, aims to use cutting-edge technology and data gathering to improve cities and foster economic growth.
In a statement today, the body said that winning businesses who bid for the money would receive between £10,000-£20,000 each "to develop and demonstrate concepts and prototypes" to address challenges identified in a recent report it produced which found that innovation in the planning system is limited, with few local areas adopting digital and data-driven techniques across the planning process.
Future Cities Catapult head of projects, Stefan Webb, said: "We’re very excited to be launching the Future of Planning Open Call to support UK SMEs to build a planning system that works even harder for planners, communities and developers.
"Here at Future Cities Catapult we actively engage high-growth businesses to drive innovation for urban development. If you have ideas on planning systems, how to increase certainty for developers, and how to enable communities to understand and engage with planning, then I encourage you to take part in our Open Call".
The deadline for applications is midnight on 26 January 2017. To find out more click here.