An £80 million grant has been put aside for over 300 Thalidomide victims in England, the government has announced.
The money will help meet their health needs over the next 10 years as they approach old age, Health Minster Norman Lamb said.
The drug was used by expectant mothers to combat morning sickness between 1958 and 1961 but it led to many babies being born with physical disabilities.
The Thalidomide Trust welcomed the announcement.
The £80m sum will be paid to the Thalidomide Trust through an annual grant.
This means that England's 325 Thalidomide survivors, many of who are unable to work, will receive financial assistance with adapting their homes and cars as they grow older and their health is expected to worsen. The average age of the survivors is 50.
The survivors had previously received some compensation from the company - Distillers - that distributed the drug.
But the government admitted a history of being at fault over the drug in 2010, and agreed to a three-year pilot project which distributed more than £25m in grants.
Much of this money has been spent by survivors on adapting their houses, buying wheelchairs and funding personal care.
The government says this new funding recognises the increasing complex health needs of Thalidomide survivors more than 50 years after they were born.
Health minister Norman Lamb said he had "deep sympathy" for all those affected by the drug.
"This deal represents our clear acknowledgment that 'thalidomiders' should be supported and helped to live as independent lives as possible, and we hope that this grant will aid that cause and provide an element of long term financial security."
John Hurley, finance director of the Thalidomide Trust, welcomed the money and said it would be distributed according to degree of disability.
"People can start to plan and build it in to planning for their old age."
Mikey Argy led the lobbying of MPs ahead of today's announcement.
She said: "This will give thalidomiders security. There had been an idea that the money might have been withdrawn.
"It will help people improve their health in very broad ways - for example, someone who's deaf will be able to have a fuller life by taking a signer out with them.
"We were able to do strange things with our bodies when we were young and agile to get around our disabilities - people have relied on their feet and teeth to do everyday things, for example - but this gets harder when you're older."
But there was still bitterness too. Martin Johnson, director of the Thalidomide Trust, said the survivors felt a "massive sense of injustice" towards the German manufacturers of thalidomide, Gruenenthal.
The £80m funding affects Thalidomide survivors living in England only.
The Scottish Government has pledged a separate £14.2m over the next ten years to help the 58 Thalidomide survivors in Scotland as they grow older.
The Thalidomide Trust will report back annually to the Departments of Health about how the money is being distributed and controlled.