But a former Conservative education minister has dismissed the move as "another ludicrous and expensive gimmick."
Maintenance allowances were announced as a UK programme by Gordon Brown, the Chancellor, during the early years of the Labour Government and the initiative has been flagged up a number of times since. Young people from low income families can qualify for up to pound;1,500 a year to stay in education after the age of 16.
But there will be penalties: weekly payments of up to pound;30 can be stopped at any time if students fail to show up or are badly behaved. The scheme also involves a carrot in the form of two bonuses worth pound;150 if the terms of a contract between student and school or college are met and the course is completed.
The reannouncement was made by Jim Wallace, Lifelong Learning Minister, during a visit on Tuesday to Craigie High in Dundee, one of four pilot authorities along with East Ayrshire, Glasgow and West Dunbartonshire. The school says that 65 per cent of fifth and sixth-year students have been helped by the cash.
Mr Wallace's departmental interest lies in broadening access to further and higher education by boosting staying-on rates. The national roll-out is expected to benefit 39,000 young people.
Mr Wallace said that maintenance allowances had proved "extremely effective" and he was sure they would boost participation across the country.
He was supported by Anne Wilson, director of education in Dundee, who hailed allowances as "a major success". Pupils had been freed from financial worry to concentrate on their studies.
"The take-up of the programme has been very good and it has been administered without any suggestion of a stigma attached to those who receive it, which was a major consideration," Mrs Wilson said.
Roy Simon, acting head at Craigie High, says that discipline, attendance and timekeeping had all improved.
Weekly allowances are staged at pound;10, pound;20 and pound;30 for household incomes of between pound;30,000 and pound;19,639 a year. The nationwide expansion will be based on year groups, beginning with 16-year-olds in 2004-05 and encompassing all 16-19s by 2007-08.
Lord James Douglas-Hamilton, a former Tory education minister and now his party's education spokesman, dismissed the plan as a bribe which had failed to make an impact in the authorities where allowances had been trialled.
Dundee's staying-on rate had remained the same, Lord Douglas said, while attainment fell in S5 and S6. Attainment also fell in the other three authorities, while staying-on rates dropped in East Ayrshire and West Dunbartonshire.
An Executive spokesperson countered with figures from Dundee showing that school participation rates for fifth-years had risen from 52 per cent in 2000-01 to 57 per cent in 2002-03. Rates for post-16s entering college increased from 24 per cent to 28 per cent over the same period.
Ongoing research from all four pilot areas, which is due to report in June, is showing an average rise of 5 per cent in staying-on rates, the spokesperson said.