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Some parents on benefits will be given up to £4,500 a year to encourage their children to start apprenticeships, the government has said.
Under plans to encourage young people into work, families will be offered a bursary to replace Universal Credit payments lost by starting jobs.
The payment is expected to benefit an estimated few thousand households, who currently face losing between £17 and £330 a week if their children start apprenticeships.
The Conservatives welcomed Prime Minister Andy Burnham's support for apprenticeships, but criticised his plans to fund the bursaries.
The bursary will be paid for from a £30m pot, funded through the growth and skills levy, a tax on employers with annual wage bills over £3m.
It followed the publication of a Social Security Advisory Committee report, external which warned of the "perverse effects" of the benefits system on young people's employment choices.
It said, for example, single parents with a disabled child could lose up to £340 per week in benefits if their child started an apprenticeship, exceeding the expected apprenticeship salary of £258 per week.
Because they are classed as paid employment, benefit payments are reduced to households where young people take on apprenticeships.
The committee said the system was hampering government efforts to reduce the number of young people not in education, employment or training (Neet).
In a recent report, former Health Secretary Alan Milburn warned that one in six young people could be Neet in the next five years unless urgent action is taken.
Official figures show more than a million people aged 16 to 24 are currently Neet.
The government said its new bursary would remove a barrier to young people taking on apprenticeships, allowing them to "earn and learn".
Work and Pensions Secretary Pat McFadden said: "By providing bursaries to those who need them most and fully funding apprenticeship training, we are making sure cost is not the reason someone misses out."
It is part of a wider package of support for apprenticeships, including funding for apprenticeship training for under-25s and additional support for employers taking on apprentices.
Helen Whately, the Shadow Work and Pensions Secretary, said: "I'm glad Burnham agrees: apprenticeships are a good thing, and we need more of them."
But she said the plan was "uncosted".
"It is spending money already committed elsewhere. So, either it is another unfunded announcement, or Andy Burnham is not being straight with us about his plans."
Burnham has said he is "on a mission" to reduce the number of Neets.
"The trend is rising at the moment, so the first thing I've got to do is to stop that rise," he said.
As he continues a flurry of early policy announcements, Burnham on Tuesday set out plans to strike a balance in the education system between prioritising academic and technical skills.
