Three quarters of parents of children eligible for a child trust fund (CTF) opened the account within the first year of the scheme's operation, official figures show.
However, the government was forced to step in to open almost 350,000 accounts, after parents failed to place vouchers worth almost 90 million pounds.
The government's first annual CTF report showed that more than three quarters of parents had opened their child's account, and over a third of children received an extra payment.
Parents of children born on or after 1 September 2002 are entitled to a 250 pound voucher to open a CTF on behalf of their offspring. Children in lower income families receive an additional 250 pounds paid directly into the account.
HM Revenue & Customs will open a stakeholder CTF account for those children whose vouchers have not been used within 12 months, and the report showed it had been forced to open 347,467 accounts on behalf of children whose parents had failed to do so.
It seems you just can't give money away, said Jason Holland, head of communications at F&C Asset Management, which provides investment trust based CTFs.
At least 87 million pounds of public money has been languishing in drawers, chucked in the bin or stuffed down the back of a sofa.
This cash could have been working away at generating tax free returns for kids to help fund the likes of future college fees.
However, the report also said that early evidence from providers suggested there had been significant additional contributions into the accounts, into which 1,200 pounds can be paid per year.
Economic secretary Ed Balls hailed the scheme a success, but said a CTF week in January, including a new run of advertising, would be staged to raise awareness of the funds and promote increased saving.
The child trust fund's success has exceeded our expectations, he said, but I want to do more.
In the run up to Christmas and in the first child trust fund week in January, we want parents, grandparents and whole families to get engaged and make the most of the opportunities the child trust fund presents.
He and minister for children Beverley Hughes will also explore how the CTF could be used to provide more help for children in care.
Hughes said: We have a special responsibility for children in care, and recognise that they often significantly underachieve.
That is why we are already working on a major consultation document, to be launched shortly, on a wide range of proposals to transform the outcomes of children in care.
It will look at how we can close the gap in the life chances and academic performance of looked after children and improve their prospects significantly.
We will also consider in the green paper how we can provide extra support to children in care through the child trust fund.
The government will make further payments into all CTF accounts when children turn seven, and is currently consulting on the possibility of a third payment when children start secondary school. CTFs mature when children reach the age of 18.