The funds of 8.8 billion yuan (1.2 billion dollars), were approved in 2005 but only announced Wednesday, as China seeks to counter the barrage of bad publicity in recent months over the safety woes.
The money was being spent on renovating and building inspection offices and test laboratories, as well as improving technical facilities, State Food and Drug Administration spokeswoman Yan Jiangying told reporters.
A set of "special regulations" had also been established to improve supervision of the food and drug industries by further empowering government agencies to carry out investigations and crackdown operations, she said.
Yan denied the announcement of the nearly two-year old project was aimed at defending China amid recent international scrutiny on the country's poor food and drug safety records.
"There is only one goal, and it is to step up the supervision ability on food and drugs," Yan said.
Responding to a reporter's question on why the industries were still plagued by crises and problems, Yan replied: "The situation has improved a lot already... but we need to strengthen our efforts."
While poor quality and contaminated products have been an ongoing problem for years domestically, China has faced rising criticism internationally in recent months over its exports.
Health scares have swirled around a range of Chinese-made exports, from toxic toothpaste ingredients to faulty tyres, pet food and toxic seafood.
Yan also confirmed that Chinese and US health officials would meet regularly to work on improving the safety of China's food and drug exports.
Plans include a joint initiative to crack down on fake drugs.
"Both sides have reached consensus on our cooperation," she said.
Last week, US health officials were in Beijing to offer technical assistance to help China address safety problems concerning food and drug exports.
The delegation also reached initial agreement with Chinese authorities on two deals related to food and drug safety, which are expected to be finalised by the end of this year.