It is estimated that more than 55,000 young people in the UK will benefit from the savings account and initial payment after the first accounts are opened in 2012.
The scheme, worth £16.7m until 2015, will be accessible on the account holder's 18th birthday.
Chancellor George Osborne first announced that a savings account would be available for children in care in March this year. The government is now also considering how to provide financial education to children in care and their carers.
Loughton said: "The best way to learn about the value of savings and investments is with real money in real accounts. Like any parent, the government wants to provide the best support to children in its care and make sure they gain the same experience as any other young person.
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