It will target some 1.3 million people a year by rehabilitating degraded land, stopping soil erosion, regenerating forests and helping to build water points in villages.
WFP will also be supplying food to almost 200,000 children every year as part of the countrywide school feeding programme.
It will help victims of HIV/AIDS and families affected by the virus by providing food to some 57,000 people in Addis Ababa, Nazaret and Dire Dawa.
The agreement was signed on Thursday between Sate Minister of Finance and Economic Development Dr. Mulu Ketsella and WFP's Ethiopia head Georgia Shaver.
The Ethiopian government will be putting some US $12.2 million into the project - largely paying for personnel, transport and office supplies.
"This programme is targeting the poorest people," said WFP spokesman Wagdi Othman. "It is reducing their household food shortages and increasing their immediate consumption and energy levels."
"That is mitigating the impact of climatic shocks that affect household food production," he said, adding: "Everything is conditioned on the donor commitment."
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