The pilot scheme, due to be launched next year, will see adults in the city who sign up for an app given wrist-worn devices that generate health recommendations, such as increasing their step count or eating more fruit and vegetables.
Users will collect points for 'healthy behaviours' which can be cashed in for rewards such as discounts for cinema or theme park tickets, and clothes or food vouchers.
The new scheme, run by HeadUp Systems, is part of the Office for Health Improvement and Disparities’ (OHID) drive to use technology to improve people's physical health.
Health and Social Care Secretary Sajid Javid said: “This pilot is an exciting opportunity to see how we can empower people to make healthy changes to their lifestyle and I would encourage all adults in Wolverhampton to come forward and register their interest.
“Taking part will help us better understand how rewards can help motivate people to make small adjustments to their daily lives that will have a lasting positive impact on their health.
“I want to make it easier for people to make healthy choices and the Office for Health Improvement and Disparities is driving forward our levelling up agenda for health across the country.”
According to the Department of Health, a third of residents in Wolverhampton are classed as being physically inactive and a below average number of adults in the city eat their five-a-day.
City council leader Councillor Ian Brookfield said: "We are working hard to improve the overall health of everyone in Wolverhampton by providing innovative solutions which can help our residents get more active.
"We are already making significant progress in tackling physical inactivity, improving infrastructure and making environmental changes to enable people to be more active, and we are delighted to be working with the Department for Health and Social Care and HeadUp on this important pilot programme to see whether offering incentives can help people make positive changes to improve their health and wellbeing."
The pilot will launch early next year. Visit headupsystems.com/healthincentives/ for more details.