The State Council, or China's cabinet, has decided to create a food allowance for about 26 million needy students nationwide, according to a statement issued on Wednesday.

Each student will receive an average of three yuan (47 cents) daily from the central budget, said a statement issued after a State Council meeting presided over by Premier Wen Jiabao.

The policy will be implemented on a trial basis in 680 less-developed counties, the statement said.

Authorities will have to allocate a total of 16 billion yuan annually from the central budget to meet the policy's requirements, it said.

The money will be given to schools instead of directly to the students' families, allowing the schools to provide more and better food in their canteens, the statement said.

Efforts will be made to build better canteens in rural primary and middle schools, the statement said.

The statement added that daily allowances for needy students at primary boarding schools will also be increased from three to four yuan, while those for students at middle boarding schools will rise from four to five yuan.