A review by the Department of Education and Employment rejected recommendations from the Dearing Committee to set up a single student support agency and pledged to keep LEAs at the heart of grant administration.
Graham Lane, LGA education chair, said: 'The LGA is pleased that this important role for LEAs in providing local services for local communities has been recognised and retained.
'Students and parents will benefit from using a local service rather than a remote system which doesn't understand local circumstances.
'The LGA is committed to improving services through the internet. The administration of student grants is one area where thousands of people can benefit from access to information and applications on-line.'