No terminally ill child in England should be forced to go to hospital for specialist care, the government says.
Palliative care can pose complex challenges
The Department of Health has issued guidance to local health chiefs which stresses the need to offer a broad range of palliative care services.
It says care should be tailored to individuals' needs - and should include the option of care at home.
It calls for greater use of nurse-led services in the community to save children unwelcome travel to hospital.
The Department of Health says seriously ill children should be cared for in an environment that makes them feel as comfortable as possible.
Palliative care should be designed to enhance quality of life for the sick child, and to provide as much support as possible for their family.
A report by the Commons Health Committee, published last year, found many terminally ill patients were being denied their wish to die at home.
The committee found that 56% of terminally ill people would like to die at home - but just 20% actually do.
Care Services Minister Liam Byrne said: "Very ill children who need palliative care deserve much more choice about the way they receive that care.
"Many families tell us they want more care at home, so we're asking the NHS to change.
"If a child wants to stay at home, they should be allowed to do so.
"It is the very least they deserve."
A step-by-step guide to setting up a children's hospice has also been launched by the DoH-funded Association of Children's Hospices (ACH).
Ministers believe that a strong hospice movement has a key role to play in providing palliative care to sick children.
ACH chief executive Barbara Gelb said: "It is vital that those responsible for commissioning children's care services understand the importance of children's hospice services and the role they play in our society.
"Primary care trusts need to be working in close collaboration with services to ensure that life-limited children and their families are receiving the highest possible standards of care available to them."
Professor Sir Alan Craft, president of the Royal College of Paediatrics Child Health, said the new guidance would help providers to create a "seamless network for this vulnerable group of children".