Arts Council England have awarded £4,900 for the event, which will celebrate the life and works of the former Poet Laureate.Mytholmroyd firm Sweet and Maxwell have also offered financial support for the event, which will run between June 22 and 24.
The festival will take place in conjunction with the Hebden Bridge Arts Festival and is one aspect of the Ted Hughes Project in Mytholmroyd, supported by The Halifax.
Sheila McAnulty, chairman of The Elmet Trust said: "This promises to be an exciting weekend in Mytholmroyd and we look forward to celebrating with local people and eminent poets alike."
The festival includes a poetry competition, open to all those aged six to 18 living or studying in Mytholmoyd with prizes of £25, £15 and £10 book tokens in three age categories.
The theme of the competition is "landscape", chosen because the local landscape was a source of inspiration for much of Hughes's work.
The competition, which has a closing date of May 25, will be judged by poet Ian McMillan and prizes will be awarded by him at the festival launch on June 22. Information about the competition has been sent to Mytholmroyd schools and is also available in the library, and Milly's Café.
Other festival highlights include a Words on Water evening cruise on the Rochdale Canal with Bronte Boats, where there will be a meal and readings from poets Amanda Dalton and Thomas Lynch. Meanwhile leading UK poet Simon Armitage will talk about Ted Hughes and read some of his own work at Calder High School.
There are also walks with John Billingsley and Donald Crossley, as well as poetry slams with Ben Allison. Further details and tickets can be obtained from the Hebden Bridge Arts Festival box office on 01422 842684.