The move will mean children currently living in temporary accommodation in areas with a high number of asylum-seeking children will be moved to permanent placements across the country.
Under this change all local authorities have been given legal notice to accept transfers of children into their care, the Home Office has said.
Kevin Foster, minister for safe and legal migration, said the decision had "not been taken lightly" and was "vital to ensure unaccompanied asylum-seeking children receive the critical care they need and end the use of hotels for them following the unprecedented recent pressure placed on the asylum system."
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