Police forces will be "compensated" for the increase in employers' national insurance, the home secretary has revealed.
Yvette Cooper told a policing conference the Treasury has said it will "ensure" police forces will not lose out as a result of changes in employers' contributions brought in as part of last month's budget.
It is the first time this has been revealed.
The home secretary also announced an extra £500m of additional funding will be given to neighbourhood policing.
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She said the money to cover the national insurance rise would be in addition to the £500m, which will come from central government.
It is not yet clear where the funding to pay for the rise in forces' national insurance bills is coming from.
Chancellor Rachel Reeves announced in October's budget the rate at which employers pay national insurance will rise by 1.2 percentage points to 15% next April, and argued Labour did not break their manifesto promise to not increase national insurance on "working people".
The NHS and the rest of the public sector are due to be shielded from the hike, but GP practices and hospices are not covered as they are operate as small businesses despite delivering NHS services.
Ms Cooper also laid out plans on Tuesday for a new unit to improve the performance of police forces across the country to end the "postcode lottery" of how effectively crimes are dealt with.
The Home Office said the unit will directly monitor police performance in areas prioritised by the government, including tackling violence against women and girls and knife crime.
The home secretary made the announcements in her first major speech at the annual conference of the National Police Chiefs' Council and Association of Police and Crime Commissioners on Tuesday.
Ms Cooper said: "Public confidence is the bedrock of our British policing model but in recent years it has been badly eroded, as neighbourhood policing has been cut back and as outdated systems and structures have left the police struggling to keep up with a fast-changing criminal landscape.
"That's why we're determined to rebuild neighbourhood policing, to improve performance across police forces and to ensure the highest standards are being upheld across the service.
"The challenge of rebuilding public confidence is a shared one for government and policing.
"This is an opportunity for a fundamental reset in that relationship, and together we will embark on this roadmap for reform to regain the trust and support of the people we all serve and to reinvigorate the best of policing."
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As well as the new government performance unit, ministers also hope to improve the relationship between the public and the police by standardising and measuring police response times - something that is not currently monitored.
In the aftermath of the summer riots, sparked by the Southport stabbings on 29 July, Ms Cooper said respect for the police needed to be restored after the "brazen abuse and contempt" shown by the perpetrators.
She said too often people feel "crime has no consequences" and that "has to change" as she promised to restore confidence in policing and the criminal justice system.
Dr Rick Muir, director of policing thinktank the Police Foundation, said: "A serious reform programme like this in policing is long overdue.
"Too often in the past, officers at the frontline have been let down by outdated technology, inadequate training and inefficient support services.
"Until these issues are addressed, the public won't get the quality of policing they deserve."
(c) Sky News 2024: Home secretary reveals police forces to be 'compensated' for national insurance rise