The funding was announced by Minister for Environment, Planning and Countryside Carwyn Jones last week.
Figures for 2004/05 showed a recycling/composting rate in Wales of 19.4% but the Welsh Assembly Government has set itself a target of 25% by 2006/07.
Each local authority will receive an allocation of the sustainable waste management grant based on its spending needs derived from the Standard Spending Assessment, and will have to provide the Assembly with details of how it intends to use the grant.
Jones said: The Welsh Assembly Government wants recycling, reusing and composting to become part of everyday life and as such we are providing the funds for local authorities to make it possible.
Indicative funds of £35 million a year for 2007/08 and 2008/09 were also announced. And in addition local authorities will have access to a Regional Capital Access Fund of £7 million in 2007/08 and £9 million in 2008/09 for investing jointly in new waste facilities at a sub-regional and regional level.