The students will be exempt from tuition fees over the course of their compulsory nine-year education.
The move would cost 15bn yuan ($1.9bn) a year, the China Daily said, or about 140 yuan ($18) a child.
But children of rural families who have migrated to China's booming cities will not be included.
The new policy is "part of a major move to relieve the financial burden of farmers and to develop a new countryside," the state-owned newspaper said.
In the first phase of the programme, which took effect this spring, more than 50m students living in western provinces - some of China's poorest - were exempted. [Full Text]