The money, which was launched alongside the Government's first Children's Palliative Care Strategy – Better Care: Better Lives, will enable some of the country's sickest children to be cared for and die in their choice of setting, whether at home or in a hospice.

The news has been welcomed by workers at Butterwick House Children's Hospice in Stockton, which provides care for four families from the Sunderland area and 65 in total from the North East.

Graham Leggatt-Chidgey, chief executive of Butterwick Hospice Care, said: "This is the first occasion on which the Department of Health has had a clear policy on how it will work with healthcare providers, including the hospice movement, to improve outcomes and experiences for children, young people and their families living with life- limiting and life-threatening conditions.

"For years the care for such families has lacked strategic direction and funding. I applaud and support the Minister's wish to see major changes within 18 months and we look forward to working with the NHS locally and regionally to ensure that the opportunities are maximised for the 80 children currently in our care and their successors."

Better Care: Better Lives is designed to give healthcare commissioners the information and guidance they need to ensure that services are developed to meet the needs of all children, young people and their families living with life-limiting conditions.

Previous Government funding of £27million for hospices and hospice-at-home care only extended from 2006 to 2009.

But now the Government has secured a further £10million a year for an extra two years up to 2011.

Mr Leggatt-Chidgey added: "Children's hospices nationally will still rely heavily on the communities they support to continue their work.

"The £20million announced for children's hospice services in England to 2011 builds on the three-year emergency funding announced in 2006.

"In May 2006, £27million funding was granted to be shared over three years by the country's 40 children's hospices."

For Butterwick House Children's Hospice this equated to a fund of £175,000 per year for three years to 2009.

But the cost of Butterwick providing its services this year alone will be upwards of £880,000, so support from the community is still very important.

If you require help organising a fund-raising activity or want more information, call the fund-raising team on 01642 628 930.