The Junior individual savings account (JISA) yearly limit will be raised from £3,000 to £3,600, the Treasury is expected to announce this next week.
Treasury sources also said financial secretary to the Treasury Mark Hoban will align the structures of child trust funds (CTFs) and JISAs, the Telegraph reports.
In March, the government said it would set the JISA limit at £3,000, but it is now likely this will be increased by £600, according to sources.
In October, the Tax Incentivised Savings Association (TISA) recommended the limit on JISAs should be £3,600, which is the same as that on ordinary ISAs.
When CTFs were closed to new savers in January, there were accusations the introduction of JISAs would be unfair on children with CTFs.
This was because CTFs previously had tax free limits of £1,200 per year, and the government only proposed to raise this to £3,000.
However, reports have now suggested Hoban will place a tax free limit of £3,600 on both JISAs and CTFs from November this year following consultation.
There are also plans to merge the two accounts together at a later date, reports said.
JISAs, will be available from high street banks, building societies, investment companies and friendly societies from 1 November. The accounts do not release any of the investment until the child is 18.
What made financial headlines over the weekend?
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch