The Northern Ireland Children's Hospice is to receive £1 million in funding from Stormont, with care outside the family home and family support services among areas to benefit.
The Hospice was established in 1998 and delivers care to around 300 terminally-ill children each year.
Chief executive, Dame Judith Hill, said: "The need to constantly strive to offer wider and improved care for children across Northern Ireland is at the heart of everything we do and we are delighted to have secured OFMDFM support to allow us to do this.
"The work of NI Hospice, both in adult services and children's services, however, would not be possible without the continued support of the Northern Ireland public and Northern Ireland businesses.
"We remain constantly grateful for their support."
The money from the Office of the First and Deputy First Ministers (OFMDFM) is intended to enhance services in the development of care outside the family home, family support services and exceptional care, Dame Judith said.
Annual running costs of the hospice's services total around £3 million, 80% generated through public and corporate fundraising, trusts and major donors.
Additional funding was sought from OFMDFM to enable the hospice to implement new project developments and meet the needs of children with life-limiting conditions and their families into the future.
First Minister Peter Robinson said: "The Northern Ireland Children's Hospice is the only service of its type within Northern Ireland caring for children and young people with very complex needs and today's announcement of £1 million over two years will ensure that the outstanding care the hospice provides for those children suffering with life-limited conditions and their families will be maintained."
There are children's hospices in Newtownabbey and Enniskillen and community services in each health trust area. The charity provides a range of palliative care services to children and young people.
Deputy First Minister Martin McGuinness said: "It is every parent's worst nightmare for their child to get seriously ill or develop a life-limiting condition. Unfortunately, this is the situation many families find themselves in.
"As the child and their family embark on their journey, the Children's Hospice provides unconditional help and support at the time they need it most. Anyone who has ever visited the Children's Hospice will know it is an extraordinary place."
Health Minister Jim Wells also welcomed the announcement.