Families of Pakistan's poorest children will receive cash sums if their child attends school, in a scheme announced ahead of a day of action for a schoolgirl shot by the Taliban.
The UN declared 'Malala Day' on Saturday, one month after Malala Yousufzai, 15, and two of her classmates were shot by the Pakistan Taliban.
The schoolgirl had campaigned for girls' education and was targeted for speaking out against the insurgency, Reuters reports.
The Waseela-e-Taleem programme was announced in Islamabad by Pakistani President Asif Ali Zardari and special UN envoy for global education, Gordon Brown.
"Malala's dreams represent what is best about Pakistan," said Mr Brown, the former UK prime minister.
On Friday, the government announced that poor families will now receive $2 a month per child in primary school.
The programme will be funded by the World Bank and Britain and distributed through the government's Benazir Income Support Programme, designed to give small cash payments to needy families.
The families in the programme already receive $US10 a month for basic expenditure.
The initiative aims to enrol three million of the poorest children in education in the next four years
Meanwhile, tens of thousands of people around the world have signed an online petition calling for Malala to be nominated for the Nobel Peace Prize.
The British government has also been urged to back the campaign, with advocates saying she represents those denied an education.
Doctors in the British city of Birmingham, where Malala is being treated, say she is making progress.