Boris Johnson made the commitment after discussing the situation during an emergency meeting of the Government’s Cobra committee this afternoon.
He had faced criticism from both Labour and the Liberal Democrats who said he should declare the flooding a "national emergency".
In a video posted online, Johnson said: “What the Government is doing, is we’re ensuring that all those already affected have the support that they need, and we are making preparations in case of further heavy rain.
“I am also pleased that the Government will be providing a Business Recovery Grant to the worst affected small and medium-sized businesses covering costs of up to £2,500 that cannot be covered by insurance.
“We will also be providing £500 to households in the area through Community Recovery Grant to ensure that those affected are also supported.”
The Prime Minister went on to thank the emergency services who have helped in the response so far.
An extra 100 Army personnel will also deployed from Wednesday to support the recovery effort, delivering sandbags and other defences to some of the areas affected in South Yorkshire.
Torrential downpours last week meant that some areas were hit by a month's worth of rain in just 24 hours.
Around 700 people in the village of Fishlake in Doncaster were told to leave their homes over the weekend after seven separate ‘threat to life’ flood warnings were issued for the River Don.
The five severe weather warnings which were in place along River Don have now been lifted, but 20 flood warnings - meaning ‘flooding is expected’ - remain in place.
A yellow weather warning for rain has been issued by the Met Office for Thursday, covering much of South Yorkshire.
Labour leader Jeremy Corbyn said he disagreed with the Prime Minister's assessment and said that if the flooding had occurred in Surrey, rather than Yorkshire or the East Midlands, it would be "far more likely" that a national emergency would have been declared.
While Lib Dem leader Jo Swinson said the incident should be declared a national emergency so the Government can apply to the EU for the emergency funds that are available at times of extreme floods.