Around 840,000 infants aged under four months will be offered GSK's Rotarix vaccine from September 2013 to protect against the highly contagious virus.
Officials said the programme would avoid thousands of hospital admissions and hundreds of thousands of GP visits for the 'distressing' condition each year.
Rotavirus is the most common cause of gastroenteritis in infants and children under five, causing around 140,000 cases of diarrhoea a year in this age group. Around one in 10 of these children will be hospitalised as a result.
The programme will cost the NHS £25m a year, although the DH expects it will save £20m from reduced GP visits, hospital stays, A&E attendances and NHS Direct calls.
The department's joint committee on vaccination and immunisation (JCVI) had concluded vaccination was a cost-effective way of protecting children against the virus.
Research found hospital admissions in the US fell by two-thirds after vaccination was introduced, the department said.
Professor David Salisbury, DH director of immunisation, said rotavirus spreads 'very easily' and causes a great deal of distress for children and their families. 'Many people think of diarrhoea as something that all children get and that you have to put up with. But there is a way to protect children from this. I’d encourage all parents of young children to accept this vaccine when the programme begins next year.'
RCGP chairwoman Dr Clare Gerada said: 'Anything we can do to prevent this illness should be seen as a positive development and we welcome the announcement of the vaccination programme for young babies . Parents should be reassured that it can be easily incorporated into the routine childhood immunisation programme.'
Rotarix is administered orally in two doses at two and three months old.
