Young people must prove an "estrangement" from their families to be eligible for allowances or income support. Previously, only their families could provide this evidence.
The package allows young people to claim benefits up to the age of 20 if they start a course before their 19th birthday. Education maintenance allowances will now be available to those on vocational courses.
Mohammed, 19, a resident at Centrepoint's supported housing facility in Camberwell, London, said: "I wanted to be a footballer but gave it up for a two-year course. I had three months left and got thrown off because I was 19."
Maria Eagle, junior youth minister, said: "We have got to have more coherence in academic and vocational courses. Young people should not be going for courses on the basis of support, but because it's what they want to do."
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