The Quality Protects initiative is intended to help children in care by reducing the number of times they are moved, ensuring they receive a proper education and helping them after the age of 16.
Health secretary Frank Dobson said: 'Even though social services are doing some good work, many children have been let down. Councils must act as true parents to children at risk or in their care.'
Total extra funding over the next three years will be£375m.
Indicative allocations are open for consultation until 12 January.