The Government is to provide an initial endowment of £1m to create a terrorism relief fund that will support British victims of terrorism in the UK and abroad.
The fund will provide rapid relief for the immediate financial needs of people caught up in terror attacks.
Tessa Jowell, the culture secretary, said: "As well as terrible injuries and psychological trauma, terror victims can suffer real financial challenges as they rebuild their lives. This new fund will provide crucial support during this difficult period."
Money has also been allocated for a memorial to the victims of the 7 July terrorist attacks in London that will reflect the wishes of the victims' families.
"It is right and fitting that they are properly remembered," said Jowell.