The Socialist government said it had set aside €665,000 ($780,000) to exhume some 33,000 victims whose remains lie behind a vast basilica near Madrid.
Franco was buried in the basilica when he died in 1975 but his remains were removed in 2019 and transferred to a discreet family plot on the outskirts of the capital.
Government spokesperson Maria Jesus Montera told reporters that more than 60 families and international institutions had called for the exhumation of the victims to give relatives who suffered during the civil war and Franco’s dictatorship “moral reparation”.
Campaigners estimate more than 100,000 victims from the war and its aftermath remain buried in unmarked graves across Spain —- a figure, according to Amnesty International, only exceeded by Cambodia.
Built between 1940 and 1958 partly by the forced labour of political prisoners, the imposing basilica and the mausoleum of the Valley of the Fallen was initially intended for those who had fought for Franco.
But in 1959 the remains of many Republican opponents were moved there from cemeteries and mass graves across the country without their families being informed.
The crypts and ossuaries where some of the victims are buried are inaccessible as they were walled off at the time.
Socialist Prime Minister Pedro Sanchez has made the rehabilitation of the victims of the Franco era one of his priorities since coming to power in 2018.
As well as the Valley of the Fallen, his government is also focusing on identifying remains founds in mass graves across Spain.