Almost $15 million will be awarded to organisations that help boost training and skills, and create and expand pathways to open employment as part of the Structural Adjustment Fund.
This fund is aimed at evolving the supported employment sector, which hosts jobs for people with disability who need substantial ongoing support and helps provide extra resources.
A further $9.8 million will go to the government's Disability Employment Advocacy and Information Program, while $1.4 million has been allocated for disability employment expos.
Social Services Minister Amanda Rishworth says the total $26 million will give Australians with disability better choice and control over their job options.
"Since coming to this portfolio, it's been a focus of mine to help ensure all Australians with disability who want to experience work - and their families and carers - can be empowered to exercise control over their journey," she said.
"We want to create a more inclusive and accepting society - and work is a key part of this."
Of the 4.4 million Australians living with disability, about 16,000 are taking part in supported employment.
The announcement comes as the government prepares to provide its formal response to the 222 recommendations made in the final report of the Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability.
The report revealed "transformational change" would be needed if Australians wanted to build an inclusive society for those living with disability and proposed reforms for areas such as human rights law, disability advocacy, guardianship, schooling, employment, the justice system and housing.
One of its key recommendations to improving employment is to ensure workers with disability are paid at least half the minimum wage and for them to be paid at least the legal standard by 2034.
The national minimum wage is $882.80 a week and, while it is the same for those whose disability does not affect their productivity, those with support needs can be paid as little as $102 for the same period.
Ms Rishworth noted it was the Fair Work Commission's responsibility to set out wages and conditions but said the government's efforts would help transition people into open employment, where they worked alongside those without disability or whose disability did not affect their productivity.
The funding could also help people transition into higher-paying jobs within supported employment, she said.
The government is expected to formally deliver its response to the royal commission's final report by mid-2024.
