Local education authorities have been wrongly cutting financial support to students leaving their care since new grants for 16 to 18-year-olds were introduced, the Government says.
In a green paper on improving the education of children in care, the Department for Education and Skills has promised to stop LEAs from unfairly reducing the cash they give to needy teenagers.
The paper, Care Matters, said: "In our conversations with practitioners, concerns have been raised that some local authorities are providing care-leavers with lower levels of financial support when they are in receipt of the education maintenance allowance.
"This is inappropriate and should not be happening. A young person receiving the EMA has the right to the same level of financial support from the local authority."
The department pledged to tell councils not to factor in EMA payments when determining the amount of financial support they give to students leaving care.
All students aged between 16 and 18 are entitled to the pound;30-a-week payments from the Learning and Skills Council, plus cash bonuses depending on their educational progress, if their household income is below Pounds 30,000.
In addition to any benefits, teenagers in care are entitled to "comprehensive financial support" from local authorities throughout their education and training. Councils should maintain contact with care-leavers until they reach at least 21 years old.
But the green paper claims that councils have been cutting their support to vulnerable teenagers, cancelling out the advantages of EMA.
A spokeswoman for the Local Government Association said: "If the DfES has recognised that some local authorities are doing this, then we would absolutely discourage it."
She said local authorities would be expected to include EMAs in the "pathway plans" they draw up with teenagers, but only so that students know what they are entitled to.
"It doesn't mean we are taking away pound;30 a week," she said.
The LGA defended local authorities' contribution to students leaving care, pointing to boroughs like Ealing in west London, which makes pound;5,500 a year available for teenagers to continue their education.
There are more than 10,000 over-16s in local authority care, most of whom are living with foster parents.
By the age of 19, more than 40 per cent have either quit education without finding work or have lost touch with their local authority carers, and the Government describes the chance of educational success for children in care as "unacceptably poor".
Under the plans, outlined in the green paper, training in dealing with the issues of teenagers in care will form part of the mandatory qualification for new principals.
Skills for Life teachers will also have a training module on teenagers in care for their new professional qualification.
Personal advisers will be allocated to every student in local authority care until they reach the age of 25, helping them to take advantage of the Government's free entitlement up to level 2 (GCSE-equivalent).
The paper also said that FE colleges are not doing enough to monitor the progress of children in care to ensure they are getting enough support. But it criticised schools for failing to pass on their information when students leave.
Every college will also have to produce a Learner Involvement Strategy which takes account of the views of students who have just left care.
Care Matters: transforming the lives of children and young people in care is available at www.dfes.gov.ukconsultations