Local authorities will have to wait until the autumn to find out exactly how much money they will receive, but the cash will be targeted at those areas most in need.
Meanwhile, the government has agreed to "reconsider" proposals to cut council funding by more than £400m over two years to finance support services for academies and free schools.
A group of 23 local authorities, including 10 London boroughs, lodged a claim for a judicial review of the planned cut in the High Court in May.
A consultation into the "reconsideration", which will run until 16 August, is intended to make sure that local authorities are not "double funded" for services they no longer provide.
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