The health secretary, John Reid, said today that the extra money for medical research unveiled in the budget would be used to improve treatments for Alzheimer's disease, strokes, diabetes and mental illness, as well as new medicines for children.

New national research networks that will coordinate research into treatments and cures for Alzheimer's, strokes and diabetes, and developing drugs for children, will be established across England by the Department of Health.

The extra £100m for medical research over the next four years will also fund more research by the National Institute of Mental Health.

The networks will be based on the National Cancer Research Networks, which support trials of cancer treatments and research by cancer charities. Specialist research institutes may also be developed, modelled on the National Cancer Research Institute.

The networks will be overseen by the UK Clinical Research Collaboration (UKCRC), a new body bringing together the NHS, the Medical Research Council, medical charities and the private sector to develop new medicines and treatments.

Mr Reid said that the extra funding in the budget was "the largest sustained increase in NHS research and development funding ever".

He said: "Investment in research saves lives that is why the government wishes to make Britain the best place for research, development and innovation in the world. I wish to ensure that the NHS's contribution to medical research is one of the centrepieces of that."

Unveiling the budget last week, the chancellor, Gordon Brown, said that funding for medical research would rise to £1.2bn a year by 2008. Mr Brown said that the government would set up new specialist research institutes to tackle diseases "that place a high burden on the nation."