Minister for Health James Reilly has said the delivery of free GP care to children aged five and under is an important step on the road to universal health insurance.
The free care will be available from the middle of next year, as legislation will be required.
The move will benefit around 240,000 children and their families.
Barnados described the move as an "excellent investment" that will ensure that illnesses are diagnosed and treated earlier.
The charity said it will take pressure off parents who may be faced with the choice of bringing a sick child to the doctor or paying for food and heat.
Prescription charges for medical card holders will increase from €1.50 to €2.50 per item.
Retail Excellence Ireland and Age Action said they were disappointed with the prescription charge hike.
Eamon Timmins of Age Action said the move would hit the sickest and poorest people.
Under other measures announced today, €113m will be saved from a review of all medical cards.
About 35,000 people over the age of 70, who currently have a full medical card, will migrate back to the GP care card.
Mr Reilly said there is likely to be a supplementary health budget later this year.
He said he could not put a figure on it at this point, but suggested it could be close to €150m.
Speaking at a Department of Health budget briefing, Mr Reilly said there would be better times ahead for people after this Budget.
The Health Service Executive now has 21 days to prepare a national service plan for next year based on today's Budget.
It will then be submitted to Mr Reilly for consideration.
The preparation will be assisted by a Government-interdepartmental group.
The Irish Pharmacy Union warned that the increase in prescription charges could result in some people not taking key medicines.
It said the cost of the prescription levy has increased fivefold in the space of two years.
The union called on Mr Reilly to exempt certain vulnerable groups including those in residential care, patients receiving treatment under the Methadone Treatment Scheme and patients who may have their medicines changed on a daily or weekly basis.
Independent TD Shane Ross said it was "extraordinary" that the Government had made the decision to cut medical cards, and accused it of targeting the elderly.
The Society of St Vincent de Paul also expressed concern about the new prescription charges and said people who were chronically sick would be targeted.