It plans to spend £56m to help children in care pay for the activities parents typically provide to help children with their education.
The money is part of a drive to raise attainment among children in care. Official figures show only 13 per cent of looked-after children get five good GCSEs, compared with an average of 62 per cent.
Junior children's minister Kevin Brennan said: "A recent Ofsted report shows that, if we are to narrow the gap between children in care and their peers, we need to offer them the same opportunities, such as out-of-school activities and educational trips."
The government will also provide councils with top-ups of £100 to child trust funds for looked-after children for each year they are in care. This will help them build up a nest-egg for when they leave. The government gives every eligible child at least £250 to start the fund and £250 when they turn seven.
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