The Government today announced details of a £20 million support package to help thalidomide survivors.
The grant will be paid over three years to the Thalidomide Trust which dispenses aid to people disabled by the drug.
A Government apology for the suffering caused will also be made in Parliament next year.
Thalidomide survivors groups welcomed the move describing it as "real benefit".
Pregnant women were prescribed the drug in the 1950s and 1960s as a treatment for morning sickness or insomnia.
It was withdrawn from sale in 1961 after babies were born with limb deformities and other damage.
The drug's UK manufacturer, Distillers Biochemicals, paid around £28 million compensation in the 1970s following a legal battle by the families of those affected.
It is hoped the pilot scheme will give thalidomiders more control over their long-term health needs.
Under the new settlement, the grant will be reviewed after three years.
Guy Tweedy, a campaigner for Thalidomide victims, said: "We are delighted by the announcement of this pilot scheme which should bring real benefits to Thalidomide victims."
Health Minister Mike O'Brien said: "I am extremely pleased to announce the details of the three-year pilot scheme agreed with the Thalidomide Trust that will help Thalidomide survivors meet their changing and increasing health needs as they approach older age.
"I know that this will be a much-anticipated early Christmas present for all those involved.
"I would also like to pay tribute to the work of the Thalidomide Trust and its officers, and members of the National Advisory Council who have worked tirelessly to champion the cause of Thalidomide survivors, and whose contribution in supporting them and their families cannot be overstated."
Nick Dobrik, leader of the Thalidomide campaign, said: "We would like to thank our lawyer Jacqueline Perry for her continued help over the last 16 years. Without her kind advice we would not be where we are today.
"Additionally, we would like to thank Mike O'Brien for treating us with so much respect and understanding in recent months.
"Lastly, I would like to thank thalidomiders themselves and MPs from all parties for listening to our concerns and for their support during this process."Reuse content