Details of the cut to the budget, revealed last week by CYP Now, were outlined in a letter from Communities Secretary Eric Pickles to local authority leaders.
It showed that by 2014/15, cash shared between authorities under the Care Matters grant will fall to £28.2m - a cut of 48.6 per cent on this year's level of £54.9m.
The DfE has said additional funding over the next two years - £31m in 2011/12 and £9m in 2012/13 - will allow local authority costs to be reduced in future years.
"We are giving additional one-off funding in the first two years to help local authorities improve the commissioning of services for looked-after children and to make use of evidence-based interventions," a DfE spokesman said.
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