Health Secretary Andrew Lansley launched the pilot saying that although a fairer funding system is needed the information essential to developing a new system is not currently available.
A consortium led by the East of England Child Health and Wellbeing Team, the West Midlands Paediatric Palliative Care Network, Great Ormond Street Hospital and the Northwest Children and Young People's Palliative Care Network will be tasked with collecting information under the £400,000 pilot.
Announcing the pilots, Lansley said: "It is most important to us that both children and adults, their families and carers get the right care and support at the end of their lives. This includes being able to make choices about where they are cared for, including at the end of their life.
"A fair funding system will enable us to ensure that this support is available. It will ensure all qualified providers of end-of-life care, whether they be statutory, voluntary or independent, are fairly funded. The pilots will have an essential role in helping us in this work."
The pilot has been set up following a recommendation from the independent Palliative Care Funding Review, which was chaired by Tom Hughes-Hallett, chief executive of Marie Curie Cancer Care.
The review, which reported last summer, made a number of proposals on how to make sure that the funding of hospices and other palliative care providers, is fair and transparent.
Dr Sheila Shribman, national clinical director for children, young people and maternity services, said: "I welcome the pilots very much as it brings us closer to a fairer funding system for all providers of children’s palliative care, and also puts children and their families in the driving seat."
The pilot sites will collect data over two years up to 2014 with the new funding system being introduced from 2015.
Barbara Gelb, chief executive of charity Together for Short Lives, said: "Today’s announcement of a crucial pilot to focus on children’s palliative care involving a consortium of four areas of England is a welcome step on the road to establishing the right system of funding.
"Getting the system right will mean providers of children’s palliative care are funded in a fairer way for the services they provide and most importantly that children and families receive the support on which they depend."
Together for Short Lives will be working with the Department of Health, and the consortium of pilot areas to help establish clear definitions and the appropriate data collection, to inform any future funding tariff.
