The Treasury said last week that the Child Trust Fund or 'baby bond', which chancellor of the exchequer Gordon Brown said he would launch in April's Budget, would entitle every baby born on or after 1 September 2002 to Pounds 250 when the scheme begins in April 2005.
Children from the poorest families with incomes below 13,230 and receiving child tax credit will get 500 and an extra payment on their seventh birthday.
Banks, building societies and fund managers will offer baby bond accounts and parents can choose to invest in cash, shares or bonds. Relatives can also add up to 1,200 a year. Income from these contributions is tax-free.
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