Equalities Minister Jo Swinson has called for teachers to act tougher against abuse of gay and transgender students in their schools.
The call comes two days after charity Stonewall suggested that more than half of all LGBT (lesbian, gay, bi-sexual and transgender) pupils in the UK suffer regular abuse.
The Minister outlined a scheme where schools can bid for funding to check whether they are doing enough to tackle the bullying which "can wreck many children's lives".
Each contract will be worth £25,000-£50,000 as part of a Department of Culture, Media and Sport project to "improve understanding of LGBT bullying and the effectiveness of schemes being used to tackle it".
After launching the fund, Ms Swinson said: "If you look at those [Stonewall] statistics they are very worrying facts on how widespread homophobic bullying is in schools. Also, equally worrying is that only 3 in 10 LGBT pupils believe their schools have processes in place to deal with this bullying properly.
"That is the gap we are trying to bridge really so the first step is to gather the evidence. We need to find out when people have changed their behaviour because if we can understand that better then we can invest in trying to have programmes that really do tackle the issue."