The councils in the scheme will have to improve outcomes for children through services offered by their children's centres.
Their performances will be measured against a range of central government targets.
Children's Minister Sarah Teather said councils should be reducing inequality.
Under the payment-by-results trial, the 26 councils in England involved will be measured against a range of targets on increasing children's readiness for school.
And oh look....
The plans are being announced on the day the Department for Education began a consultation on the changes to statutory guidance on Sure Start Children's Centre.
It comes after scores of children's centres around the country have been earmarked for closure and merger.
Under the new draft guidance, a children's centre has been redefined as a place where users can be directed towards certain services rather than providing them itself.
A children's centre may simply "provide advice and assistance on gaining access to services elsewhere" under the changes.
Councils are also being urged to look at a wider range of possible providers when commissioning the services.
Nice little earner this poverty industry...