President Francois Hollande's government announced €2.3 billion ($2.9 billion) in subsidies in next year's budget aimed at creating 150,000 new jobs for youth by the end of 2014.
The plan – dubbed "jobs of the future" – is targeted mainly at 16- to 25-year-olds without high school diplomas from poor urban and rural areas.
After unveiling the plan at a cabinet meeting, Labour Minister Michel Sapin said the measure aimed to hit at "the heart of youth unemployment" in France.
A bill on the measure will be submitted to France's National Assembly on September 10 and Sapin said some jobs would be available as early as January.
Under the plan, the government will subsidise hirings in the public, non-profit and, to a smaller degree, private sectors to a maximum of 75 percent of the minimum wage for three years.
With the number of jobless nearing three million and polls showing his popularity falling, Hollande has made job creation his government's key goal since he took power in May.
But he is also struggling to find savings of 30 billion euros ($38 billion) in next year's budget to meet EU deficit reduction rules.