Every secondary school will receive a share of £65m in 2011-12 and 2012-13 to enable PE teachers to help drive up participation in primary schools.
The funding, which will pay for PE teachers to spend time out of the classroom one day a week, will also help establish a fixture network for schools to boost competition.
Meanwhile, school sport partnerships will be funded by the Department of Education until the end of the 2011 summer term at a cost of £47m.
Lottery funding will be used to establish a framework of competition as part of the School Games concept, while competitive sport will be at the heart of a revised PE curriculum.
Elsewhere, Dame Kelly Holmes will be invited to lead 'sporting advocates' to help promote school sport around the country and to increase participation.
The Youth Sport Trust will be funded to expand the Young Ambassadors programme, with every secondary school able to appoint ambassadors ahead of the 2012 Olympics.
Gove said: "It's time to ensure what was best in school sport partnerships around the country is fully embedded and move forward to a system where schools and parents are delivering on sports with competition at the heart.
"This will take some time and I'm pleased to be able to confirm some funding for school sports partnerships during this transition."
Youth Sport Trust chair Baroness Sue Campbell said: "The Youth Sport Trust is absolutely delighted that the coalition government has taken the decision to build on the great work that is being delivered across the country in school sport and is providing a level of investment that will allow all young people to continue to have opportunities to take part, and compete, in sport."
Dame Kelly Holmes added: "I like the emphasis on competition as well as participation because healthy competition is the driving force behind every world-class sports person, as well as giving every child key life skills."