George Osborne will make the announcement, which will unlock £4.8bn in child trust funds, in his Budget Statement later today, The Daily Mail reports.

Parents and grandparents contributed thousands of pounds to child trust funds on the back of promises from the last Government that they would prove ideal long-term investments for their child. But Coalition austerity measures meant the £250 being paid to every newborn to start a fund was stopped and the trust funds scrapped, to be replaced by Junior ISAs with no state contribution, The Mail says.

Those with a child trust fund – children born between September 1, 2002, and January 2, 2011 – have not been entitled to open a Junior ISA or transfer their cash to one.

Child trust funds have been in decline since 2011 seeing millions trapped in expensive products or suffering lower interest rates than their junior ISA counterparts

The Chancellor is expected to announce a 12 week consultation to allow the transfer of child trust funds to junior ISAs.

Danny Cox, head of financial planning at Hargreaves Lansdown, said:

“Common sense has broken out at last. This consultation will pave the way for a significant improvement in choice and outcomes for over 6 million children and should ultimately lead to a full merger.”