Mental health nurses are to be posted in police stations and courts in a £25m pilot scheme designed to ensure people receive the treatment they need and cut reoffending rates.

The government scheme, which will initially run in 10 areas and be rolled out across the rest of the country by 2017 if successful, was welcomed by mental health campaigners, confident that it would prove its worth.

The majority of people who end up in prison have a mental health condition, a substance misuse problem or a learning disability and one in four has a severe mental health illness, such as chronic depression or psychosis.

“Too often people with mental health illnesses who come into contact with the criminal justice system are only diagnosed when they reach prison,” said care and support minister Norman Lamb. “We want to help them get the right support and treatment as early as possible. Diverting the individual away from offending and helping to reduce the risk of more victims suffering due to further offences benefits everyone.”

The money will be made available over the next year to bridge the gap between the police, courts and mental health services in Avon and Wiltshire, Coventry, Dorset, Leicester, London, Merseyside, South Essex, Sunderland and Middlesbrough, Sussex and Wakefield. The Department of Health said it would ensure people receive the treatment they need “at the earliest possible stage”. It has been estimated that police officers spend 15% to 25% of their time dealing with people with mental health problems. Policing minister Damian Green said: “Officers should be focused on fighting crimes and people with mental health conditions should get the care they need as early as possible. These pilots will not only ensure that happens but in the longer term will help drive down reoffending by individuals who, with the right kind of treatment, can recover fully.”

The scheme comes nearly five years after the landmark Bradley report said too many offenders with mental health difficulties and learning disabilities were ending up in prison without access to appropriate treatment. One of its recommendations was that all police stations and courts “should have access to liaison and diversion services”.

Andy Bull, deputy chief executive of the Centre for Mental Health, said: “The fact that this is a new investment in a new form of service – or one that is patchy at present – is hugely encouraging. This will genuinely help a lot of people.” But he said it was crucial that services were available when mental health issues had been identified.

Paul Jenkins, chief executive of Rethink Mental Illness, said there had been some frustration at the amount of time it had taken to implement such a scheme since the Bradley report, but welcomed the “really significant initiative”, which he said would easily demonstrate its worth. “There’s immense potential to divert people away from expensive prison sentences,” he said. “But in the short term we might just see it be less hassle for the police in terms of processing people, which will also save money.”