The country plans to spend more than 430 billion yuan ($70.4 billion) in 2015 and more than 700 billion yuan in 2016 and 2017 on internet infrastructure, according to a guideline issued by the State Council, China's cabinet.
It said China would accelerate building of high-speed broadband networks and improve internet access in more than 14,000 villages by the end of 2015.
By the end of 2017, the average cable broadband speed for users in major cities will be increased to 30 megabytes per second (Mbps), more than triple the current speed, while that in smaller cities will be upgraded to 20 Mbps.
According to the guideline, the telecom market will continue to be opened and more competition will be encouraged through policies, including expanding a pilot scheme for broadband services this year.
The State Council also vowed to expand the 4G network to cover the whole of the country by the end of 2017.
It urged telecom operators to improve services and cut charges for Internet usage.
The guideline came one month after Premier Li Keqiang criticised the country's internet for being expansive and slow.
Analysts said faster and cheaper internet connections will help promote the country's "Internet Plus" scheme, a new strategy introduced by Li in March to integrate mobile internet, cloud computing and the Internet of Things with modern manufacturing to form a new engine for growth.
As its economic growth has slowed, China is striving to unleash the economic potential of its internet users, who numbered 648 million at the end of 2014, giving the country the world's largest online population.
Under an action plan issued by the ministry of commerce, China is aiming to increase its 2016 e-commerce transactions to 22 trillion yuan, from 13.4 trillion yuan recorded in 2014, and lift the annual value of online retail sales to 5.5 trillion yuan in 2016, up from 2.8 trillion yuan in 2014.
The Stae Council's guideline came even as the Chinese military's mouthpiece newspaper warned of the possibility of "Western hostile forces" using the internet to foment revolution in China.
"The internet has grown into an ideological battlefield, and whoever controls the tool will win the war," according to an editorial published in the People's Liberation Army (PLA) Daily on Wednesday.
It stressed the need for cyber security measures to ensure "online ideological safety", euphemisms suggesting efforts to safeguard China's mainstream ideology, the editorial stated.
"Western hostile forces, along with a small number of Chinese 'ideological traitors', have maliciously attacked the Communist Party of China, and smeared our founding leaders and heroes with the help of the internet," the paper stated.