An estimated 6,600 underprivileged university students could receive a yearly allowance of up to HK$8,000 to pay for dormitory accommodation.
The money will be provided from the HK$130 million Commission on Poverty fund.
Local students are guaranteed a place in student hostels for at least one year during their courses at Hong Kong universities and colleges.
However, housing fees of more than HK$8,100 a year can be too expensive for some underprivileged students and force them to find other accommodation.
A student who passes both the income and asset test can be given an allowance of up to HK$8,000 a year through the Community Care Fund. The scheme will start this September and run for three years.
The Education Bureau predicts 6,600 students could benefit from this grant.
Peter Cheung Kwok-che, a commission member, backs the funding plan, which is to be discussed at a meeting today.
He says staying in student hostels is a very important part of university life, which helps students to broaden their social network. "If a student doesn't get to live in a dorm, he or she will have less opportunity to get to know students in other departments," Cheung says.
The commission also wants up to 31,000 underprivileged students at self-financing institutions to be given an extra allowance of HK$2,000 each year, over a three-year period.