The government said that it was "critical" that SMEs were given access to public sector contracts, instead of leaving them as the "preserve of big business".
To ensure this happens the government has set the goal that 25% of its procurement should be directed to SMEs, while government agencies will aim to remove qualifying barriers that prevent small businesses accessing government contracts.
The tender target is part of a range of measures announced this morning (1 November) to help boost small business-growth and encourage entrepreneurs.
These centre on three major policies, all targeted at SMEs, including: improving access to finance; making it easier to do business with the public sector; and allowing social tenants to start up their own businesses from home.
Mark Prisk, Minister for Business and Enterprise, said: "As a former small business owner I know how important our SMEs are to the growth of this country. I entered government with the goal of making this the most entrepreneurial decade in our history and I'm confident today's announcements will make that a reality."
In addition, the Prime Minister David Cameron has appointed former trade and industry secretary Lord Young of Graffham as the coalition's enterprise tsar.
The Prime Minister said: "I feel very strongly about the need to do everything we can to help and promote small and medium-sized businesses. They provide nearly 60% of our jobs and half of our GDP.
"As I said in my speech to the Confederation of British Industry, enterprise is crucial to our strategy for a new economic dynamism.
"This Government has already taken action to back small businesses. But there is so much more that we need to do to back up our commitment to make this country one of the best in the world to start, run and grow a small business."
Lord Young's first task will be to write a "brutally honest" report on what the government can do to help smaller enterprises and start-ups prosper.
The report will address how all government departments interact with and impact on small businesses, including how the government can maximise growth opportunities for SMEs by reforming government procurement, ensuring access to finance, and supporting trade and investment.
It will also look at how the government can: encourage start-ups; remove bureaucratic burdens and barriers to growth; and improve communication between the government and SMEs when it comes to informing policy decisions and providing guidance.
Lord Young said: "I am delighted to accept this new appointment. I’ll be focusing on what barriers government policy has put in the way of small business development and helping to advise on what can be done to make life easier for businesses to start and grow."
