The reforms, announced by health secretary John Reid, will also involve thousands of parents receiving vouchers for free fruit and vegetables.
Under the current Welfare Food Scheme, which was created in 1940 as a wartime measure to protect children's health under rationing, parents only receive tokens for liquid milk and infant formula milk. They are being replaced by vouchers which can be used to buy fresh produce as well as milk.
The tokens will be worth at least 2.80 per week to families with children aged over one year, while families with children aged up to one year will receive weekly vouchers worth at least 5.60. They will be able to exchange the vouchers with milkmen, greengrocers, retail pharmacies and supermarkets.
Qualification for the scheme is based on factors such as low income or if parents get tax credits. All pregnant women under the age of 18 regardless of income will be eligible for the scheme. Nursery children, who are currently only offered milk, will be able to choose fruit or milk, instead of just milk.
Mr Reid said, 'The best way of tackling obesity is through encouraging a healthy diet at an early age. These changes mean that pregnant women, nursing mothers and younger children already benefiting from the scheme will in future have a greater choice of healthy eating options, so reducing the chances of obesity.'
An estimated 800,000 people are expected to benefit from the scheme, which will be phased in from the end of this year.
The Government proposals were announced a week after the Royal Colleges of Physicians, Paediatrics and Child Health and the Faculty of Public Health claimed in a report that 9 per cent of children aged between two and four were obese.