Parents and relatives are saving more money than before into tax free child trust fund (CTF) accounts, an industry survey has shown.
Children born since September 2002 are entitled to a CTF account
According to the latest survey from the Tax Incentivised Savings Association (TISA), regular contributions and lump sum payments have both increased.
With CTFs, children get £250 from the state at birth and age seven, with families able to add £1,200 every year.
More than three million accounts have been opened since the scheme began.
All children born since 1 September 2002 in receipt of child benefit are entitled to have a CTF.
The scheme was designed by the government to help provide a financial nest egg for young people as they reach adulthood.
The money saved in the accounts grows tax free, and cannot be accessed before the child's 18th birthday.
Children from lower-income families receive an extra £250 from the government at birth and age seven.
TISA's quarterly research is based on information by providers accounting for more than 60% of the CTF market.
The latest survey showed a rise in the number of parents, relatives and friends making extra contributions, as well as an increase in the actual amounts saved both regularly and through one-off payments.
Monthly direct debits have risen by 1% since the last survey, with the average amount now £21.43.
At the same time, the average lump sum amount has rose by 3.5% to stand at £450.
That represents an increase of 40% since August 2006 when TISA carried out its first survey.
The association's director general, Tony Vine-Lott, said the growth was very encouraging.
"This additional money will make a big difference in the outcomes of children's CTFs," he said.
"The fact that we are seeing increases across the board - percentage setting up direct debits, percentage making a lump sum contribution and the amounts contributed - is a testament to the success of the scheme ," he added.
According to the government's latest statistics, there were just over 3.2 million accounts in operation at 15 December 2007.
That represents 91% of the 3.5 million vouchers which had been issued by the same date.
Unused vouchers expire after a year, at which point HM Revenue and Customs, which administers the CTF scheme, opens accounts for the children in question.