Education Maintenance Allowance bonuses to be abolished

At the moment, eligible students get between £10 and £30 per week plus two £100 bonuses, in January and June.

Under the new set up, which is expected to save around £250m over three years and will start in September 2011, learners will only receive weekly payments.

The changes will also fund an extra £1.5m for the Discretionary Learner Support Fund, which gives immediate support to students facing financial hardship.

Ed Balls said the removal of bonuses was necessary to make sure that the "sums add up" in the 16 to 19 education budget.

He said: "It's a tough choice but there isn't any evidence to suggest that the bonuses make a difference to whether young people stay on. Without the changes, we couldn't be confident of meeting the September Guarantee next September."

The September Guarantee is the government pledge to offer all 16 and 17 year olds a place in education or training.

Speaking at the launch of The Children's Plan Two Years On, Balls also outlined his basic spending plans for 16 to 19 education and training between now and 2013.

More than 500 schools and colleges, which recruited extra learners due to unprecedented demand, will receive a share of an £11m top-up fund this year.

An extra £202m funding will finance places in learning for 16- to 19-year-olds next year and there will be a real terms increase of 0.9 per cent year on year for 16 to 19 funding in 2011/12 and 2012/13.

Balls added that college building programmes would receive a further £30m, in addition to the existing £240m fund, to increase the number of college places for 16 to 19 year olds.

Later this week, the Learning and Skills Council is expected announce the details of 12 colleges that will benefit from the cash.