The British government is making £20 million pounds in funding available for people disabled after their mothers took the drug thalidomide.
An apology will also be made in Parliament in the new year.
Campaigners have long battled for additional support for the 466 UK survivors disabled by drug, which was prescribed from 1958-61 for morning sickness.
The Thalidomide Trust will be responsible for distributing the grant in a three-year pilot scheme, to help meet the health needs of those affected.
The BBC reports thalidomide was developed in Germany in the 1950s. Prescribed as a "wonder drug" for insomnia, coughs, colds and headaches, it was also given to pregnant women to relieve the symptoms of morning sickness.
A link with birth defects was shown in 1961, which led to the drug being taken off the market.
Affected babies commonly suffered missing or deformed limbs and severe shortening of arms or legs.
The drug also causes malformations of the eyes and ears, heart, genitals, kidneys and digestive tract. Many babies would have died before birth.
Thalidomide was withdrawn after 2000 babies were born with limb deformities and other damage.
In the 1970s, the drug's UK manufacturer, Distillers Biochemicals, paid around £28 million compensation following a legal battle.
The BBC reports campaigners hope a further £5 million could be provided if Scotland, Wales and Northern Ireland contribute to the fund.
