Both of Action for Street Kids’ employees requested voluntary redundancy as part of the move, which a Toybox spokeswoman said would increase cost-efficiency and help more street children.
She said the current financial climate, which she said was difficult for many smaller charities, was one of the reasons for the merger.
The Toybox executive team, chief executive and board will remain unchanged, although discussions are continuing about transferring Action for Street Kids’ board members to the charity, the spokeswoman said.
There will be no redundancies within Toybox’s 16-strong team as a result of the merger, the spokeswoman said.
The Toybox brand will remain and Action for Street Kids will be incorporated into the charity, she added.
The transfer of Action for Street Kids’ programmes to Toybox will be complete by the end of the summer, she said.
According to the Charity Commission website, Toybox had an income of more than £1.5m and spent almost £1.7m in the year to 31 March 2016.
Action for Street Kids had an income of £408,267 and spent £396,288 over the same time period, the Charity Commission website shows.
Lynne Morris, chief executive of Toybox, said the merger would help both charities reach more children and become more efficient.
"In joining Action for Street Kids’ programmes to those of Toybox, we will be extending our geographical and operational reach, and working to positively impact and change the lives of exploited children globally," she said.
"The priority of both organisations in this partnership is to ensure that we protect the delivery of all our vital services to those children who need it the most."
David Beck, executive director of Action for Street Kids, said: "Opportunities like this don’t come along often and when they do you need to seize them. By joining Action for Street Kids with Toybox, we are creating a stronger force for good that can speak for children who are on the streets and help rescue more children from a life of hunger, abuse and despair."