The project will be funded from a £974,000 grant from the Access Fund, plus £115,000 of local funding from North Yorkshire County Council and partners.
Projects will involve a mixture of cycle safety and training programmes, promotion of cycling opportunities within and around the three towns, investment to help people get to work, training or education.
Work will also be done to prepare cycle infrastructure development bids to take advantage of future funding opportunities.
The Bikeability cycle training scheme will be expanded to reach hundreds more primary and secondary school pupils and work will be done with secondary schools, colleges and An Open Scarborough online app and website, which will provide a guide to sustainable travel in the town will be launched.
The Cycle the Dales website will also be enhanced, with additional funding from the Yorkshire Dales National Park Authority.
Fifteen more vehicles will be provided for Wheels 2 Work, a moped loan scheme that helps people get to work, apprenticeships or training where no other transport is available.
The extra mopeds are expected to benefit about 30 people in each town across three years. Additional funding towards this comes from North Yorkshire Wheels 2 Work.
Sustainable transport will be factored into new developments from the outset to ensure routes and infrastructure are in place from the beginning. This is expected to target about 10,000 homes across the three towns.
County Councillor Don Mackenzie, Executive Member for Highways and the County Council’s Cycling Champion, said: “I am pleased that the Government has recognised the quality of our bid.
“Funding for transport is always difficult to come by and we in North Yorkshire make every effort to take all opportunities to attract funding.
“An increasing number of our residents are choosing to give up their cars and use two-wheeled transport, and we recognise the need to support and encourage this.
“Better cycle routes allow more people to cycle, so the County Council has identified additional funding to allow the preparation of detailed cycle route plans.
“This will put us in a good position to take advantage of any future potential funding for cycle routes.”