Gordon Brown also promised increased investment in school buildings, on top of the pounds 19bn for education already announced as part of the Government's comprehensive spending review last year.
Universities received extra funds, too. Mr Brown announced a pounds 100m increase in spending on university science laboratories and a 30 per cent increase in the University Challenge Fund, which was set up to encourage academics to develop the commercial potential of their research.
David Blunkett, the Secretary of State for Education, said the extra spending on books "will be a big boost to school libraries in the National Year of Reading. It will be a very valuable extra resource for teachers and pupils across England."
Teachers' leaders immediately welcomed the extra cash, an echo of last year's spring windfall, which gave all English schools pounds 1,000 for textbooks.
Doug McAvoy, general secretary of the National Union of Teachers, said: "The investment in books will help reduce some of the shortfalls, particularly in primary schools." He also said the continued investment in our school buildings would help to rid the country of crumbling schools.
Graham Lane, who chairs the Local Government Association's education committee, said: "The book allowance will be very welcome, particularly in small primary schools in rural areas. It will almost double their book allowance at a time when they might have had to cut it right back to pay for teachers' pay rises." He also particularly welcomed the extra pounds 100m for computers for inner city schools.
But Don Foster, the Liberal Democrat education spokes-man, accused the Government of being "limited and timid. "The welcome extra cash for books will not compensate schools for last month's poor local government settlement. Despite the Budget, teachers' jobs will still be lost and many school budgets cut," he said.
Announcing additional funding for universities, Mr Brown said that he wanted to "to transform British inventions into British-made products". He announced a 30 per cent increase in the pounds 65m budget for the University Challenge Fund, and said there would also be pounds 20m start-up funding throughout the country to ensure the necessary flow of finance into high-risk companies.
Academics welcomed the extra support for science research. David Triesman, general secretary of the Association of University Teachers, said: "Decades of funding cuts had shackled our research. This announcement is a real boost to recovery."
Ministers committed themselves last July to spending pounds 19bn on schools, colleges and universities over the next three years, the biggest single investment in education. They will spend pounds 2.9bn extra in the first year, pounds 6.6bn in the second and pounds 9.7bn in the third to honour the Prime Minister's promise to spend more of the nation's wealth on education.
The money will help to fulfil a government pledge to bring infant class sizes down to a maximum of 30 by 2001. There will be funds to raise standards in schools through daily literacy and numeracy hours in primary schools and training for all teachers on the best way to teach the basics.
Capital spending on schools will double over the course of this Parliament - more than a million children are still taught in classrooms built before the First World War.
Students numbers will rise by 500,000 from the present 5 million in full-and part-time study. Most of the extra students will be in further education colleges.
Overall, the proportion of national wealth spent on education will rise to 5 per cent by 2001-02, compared with 4.9 per cent in 1996-97.