Kenya will spend pound;625,000 mainly on Madrasa pre-schools. The aim is to try to stem the increasing numbers of mosque-educated children who are "behind" when they enter primary school.
Traditionally the mosque schools were only for religious education - with much rote learning of the Koran - but basics such as literacy and numeracy are now appearing on the timetable.
The changes were initiated by the Aga Khan, the spiritual leader of the Ismaeli Muslims, whose foundation has been at work in 200 community-run mosque schools across East Africa.
Kenya's decision to inject a sizeable sum into the project is expected to spark a similar response from Uganda and Tanzania, where more than 5,000 children go to mosque schools in the Aga Khan scheme.
The transformation of the Madrasas has also meant retraining about 750 teachers, largely young unmarried Muslim women, in child-centred learning. Each teacher has been supported by an experienced mentor based in a Madrasa resource centre.
The centres co-ordinate and support all the local mosque pre-schools as well as designing learning materials and developing the curriculum.
The mixed religious-secular curriculum is founded on goals set by the East African ministries of education. But the range of subjects and the way they are taught reflect parents' expectations that children are socialised into the cultural mores of the local community.
Parents form management committees to run the schools. Families are expected to contribute to teacher salaries and the up-keep of the fabric of the school according to ability to pay.
In addition to the Kenyan cash, the Aga Khan Foundation has established endowment funds, pledging to match sums of up to pound;1,600 raised locally. These funds are invested in a central trust fund with the interest helping to defray running costs.
The initiative has the approval of the World Bank, which has promised funding to promote the Madrasa model elsewhere in Kenya. Further expansion ofthe scheme showing that the mosque can effectively integrate secular and moral education is expected in all three East African countries.