The Government decision ends months of confusion which saw the fund - known as Section 11 - move from Home Office control back to the Department for Education and Employment. The fund, which provides Pounds 83 million a year for specialist language support teachers for pupils with English as a second language, will be paid as a new standards fund grant.
However, the move does not end uncertainty for thousands of teachers employed under Section 11 - none of whom have fixed contracts beyond after March 1999.
Doug McAvoy, general secretary of the NUT, has asked David Blunkett, the Education Secretary, for an urgent meeting to discuss what the changes will mean for Section 11 teachers.
It is understood that 90 per cent of the new fund will be devolved directly to schools.