The measure to remove council tax for students progressing to a degree-level course was outlined during a Parliamentary debate about the Scottish Government's funding for local government for the period 2014/15, which also confirmed funding for the continuation of the council tax freeze.
John Swinney, the finance secretary, said: “Students progressing from a HNC or HND to a degree-level course will now be exempt from council tax, which will help us to widen access to education for all, and provide increasing opportunities for our young people to develop the learning and skills that will equip them for the future.”
In addition, the Scottish Government promises to invest £13 million in colleges in Scotland, which Deputy First Minister, Nicola Sturgeon claims could create an extra 3,500 places.
The announcement follows a report released last month showing that college student numbers had fallen by 140,000 in the past five years.
Ms Sturgeon, visiting West College Scotland in Paisley to announce the new provision, said: "This funding will provide high-quality training in areas where skills are in particular demand, and will help many young people into work.
"It will also provide re-training to workers so that they can develop their existing skills.
"To secure sustained economic growth, Scotland needs to have a skilled and adaptable workforce. It is this type of joint investment that will help us meet this ambition."
The new college places are being created on courses for key sectors of the economy which are in demand of skilled workers such as the energy industry, the food and drink sector, health, and digital media.
Responding to the funding announcement, Larry Flanagan, the head of the Educational Institute of Scotland, the country's largest union for teachers and lecturers, said: "The planned injection of an additional £13m in funding into the further education sector will open up new opportunities for learners across Scotland.
"As the country works its way towards a better economic future, the role of further education in ensuring that Scotland has a well-qualified and skilled workforce is ever more important."