The national agreement will see all 32 of Scotland's councils paying just under £700,000 between them for each of the next two years to support the Children's Hospice Association Scotland (Chas).
While other charities have experienced cutbacks in funding from local authorities, or are anxiously awaiting budget decisions or revised council contracts, the deal gives Chas a small increase in the amount it is paid for the support it provides, which includes two children's hospices and a home-care service.
Robin House, in Balloch, Dunbartonshire, and Rachel House in Kintyre provide residential respite care for children and families from across Scotland, while the Chas At Home service provides support to terminally ill children and those who will not live to see adulthood, in their own area.
The charity also works in children's hospitals such as the Edinburgh Sick Kids and Glasgow's Yorkhill, and offers continuing counselling and support for bereaved parents. Previously, the charity negotiated individually with local councils to secure support for its work.
Chief executive Maria McGill said: "This gives us guaranteed funding, which we haven't had to date, and allows us to plan for the future."
She said Chas was supporting 302 families of a child with a life-shortening condition, and added: "It is hard to imagine anything more traumatic than learning that your child will not live into adulthood.
"Ever since Chas first began providing care to children and young people 21 years ago, we have never been guaranteed funding from Scottish councils, until today.
"This significant agreement means that by working together with our local authority colleagues, we now have secured funding from every council across Scotland to help us provide our vital hospice care.
"We believe that this not only marks the start of increased funding for Chas, but also increased awareness of Chas, which will enable us to reach more families who need our help. Chas can now plan ahead to ensure we continue supporting severely ill children and their families, in the best possible way."
Cosla education convener Councillor Douglas Chapman said "I am absolutely delighted that the National Funding Agreement for Chas has become a reality following the decision taken by Scotland's council leaders today."