Education Minister Chris Hipkins said operating funding would increase by $1.6billion over the next four years to address rising demand for education, fund 1500 more school teachers and raise teacher-aide funding.
Nationwide, $332.4million would be invested in new infrastructure between 2018 and 2021, for more than 200 new classrooms.
A further $62million would go towards the Christchurch Schools Rebuild programme.
Early childhood education would also get a $590.2million operating boost over four years, benefiting more than 200,000 children and 4100 providers from January 1, 2019.
It aimed to take financial pressure off ECEs and provide an additional 62.5million early learning hours for pre-schoolers.
And $284million would be invested in learning support which would allow every child with special education needs and learning difficulties to better participate in school life.
Mr Hipkins said Government funding was already allowing thousands to study for the first time at polytechnics, wananga, private training establishments and universities, and training as apprentices as part of the fees-free study policy.
It meant in the first three months of 2018, 25,400 fewer students borrowed to pay for fees, which will help them repay their loans more quickly.
The new education funding takes total investment in the 2018/2019 financial year to $12.26billion, and is a "solid start" in the "fight-back" against the failed approach of recent years, Mr Hipkins said.
"This Government is starting off in catch-up mode, but this is a significant first step.
"We are not prepared to put our children's education at risk. We have a plan to address growing roll numbers and over-crowded classrooms."
New Zealand School Trustees' Association president Lorraine Kerr said Budget 2018 was "an excellent one" for schools.
"The best thing about it is the joined-up approach to improving outcomes for children and families.
"The direct support for education through improved operational funding, provision for additional teacher aide funding, recognition for early childhood and other improvements to learning support in particular, are all very welcome.
"They will be all the more effective for being supported by other initiatives to remove some of the barriers to learning, like housing conditions and access to healthcare that have affected too many of our children over recent years."
She said the Government was right to brand this budget as "Foundations for the future".
"That is exactly what it appears to deliver."
Post Primary Teachers' Association president Jack Boyle also welcomed the extra funding for special education and the operations grant.
However, he was disappointed the budget did not deal with the declining number of secondary teachers.
"It's great the Government is planning for future roll growth, but we were hoping for more action to fix the twin crisis of declining numbers of teacher graduates and high levels of attrition in the profession.
"At the moment we simply can't attract enough people willing and able to take on this role."
New Zealand Principals' Federation president Whetu Cormick also praised the funding boosts, but agreed with Mr Boyle that more needed to be done to attract teachers to the profession.
"Unless the Government addresses the issue of teacher salaries, I don't believe we are going to have the higher numbers of young people choosing teaching as a profession."
He said unions were in pay negotiations at present.
Education
•Operating funding up by $1.6 billion.
•$332.4 million for new infrastructure.
•$590.2 million boost for early childhood education.
•$284 million for learning support.
