Matching a commitment made in the Conservative manifesto, the Pupil Premium is designed to boost educational standards for the country's poorest pupils and help shield them from the legacy of Labour's record £155bn deficit.
Secretary of State for Education Michael Gove said: "We inherited one of the most stratified and segregated school systems in the developed world. Low ability children from rich families overtake high ability children from poor families during primary school, and the gap grows as the children get older.
"But 18 the gap is vast: out of 80,000 pupils eligible for free school meals, just 45 make it to Oxbridge. That's fewer than some private schools manage by themselves. As a nation, we are clearly wasting talent on a scandalous scale.
"I am delighted that we are today able to deliver on our manifesto commitment to introduce a Pupil Premium. Schools that attract a larger number of poorer children will have the additional resources to pioneer new ways of operating and the money to pay more for higher quality teaching.
"This policy attacks disadvantage at root by giving resources to the people who matter most in extending opportunity: school leaders and teachers."
The premium will include a pledge to provide 15 hours a week of pre-school education to two-year olds, in addition to the services already provided to them at ages three and four.
Schools will also receive additional funding to offer help to pupils eligible for free school meals and help to access.