Environment minister Sue Essex said the money would enable the agency, “to be much more active in bringing prosecutions against those involved in illegal waste activities”.
The agency has begun unannounced inspections of waste sites outside office hours, detecting several serious breaches of waste management licences, Ms Essex said.
Two operators have had their licences suspended and legal action is being taken in several cases.
Last year, the Environment Agency Wales undertook 90 successful waste prosecutions.
Alun Gee, acting director of the Environment Agency Wales, said: “We will continue to take firm action to ensure that those who operate irresponsibly and illegally are identified and dealt with accordingly.”
He said that 94 checks were made on waste carriers between April 2001 and March 2002, and 40 were found to be unregistered.
Of these, seven prosecutions have been brought, 30 'registration required' letters were issued, and three received formal cautions.
Two vehicles were confiscated and destroyed following their use in fly tipping in Cardiff.
The agency's fly tipping enforcement teams have been involved in 29 prosecutions, with a further 63 cases under investigation.
These relate mainly to what the agency called “planned, well organised and highly profitable illegal operations”.
The agency has also targeted companies which are believed not to be complying with the packaging waste regulations.
Four companies have been prosecuted and 18 offered formal cautions, with enforcement action pending against others.
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