Rubina Ali, 9, and Azharuddin Mohammed Ismail, 10, both lost their homes this month when authorities demolished parts of their slum in Mumbai.
Ashok Chavan, the chief minister of the state of Maharashtra, said he approved the transfer of two government apartments to the children on Friday. Their former neighbors in the slums, however, won't be so lucky.
"'Slumdog Millionaire' has won Oscar recognition," Chavan told the Associated Press. "We thought this would be a proper thing to honor these children acting in the film. It would be a good gesture on the part of the government."
Filmmakers have also promised the stars new apartments.
Rubina - who has been staying with relatives - was delighted by the prospect of a new home.
"I'm very happy. I can have a place of my own. It will be much cleaner," she said.
Azhar has been living in a makeshift shanty of tarps and blankets with his parents since their eviction.
Amarjeet Singh Manhas, chairman of the Mumbai Housing and Area Development Board, said the local chapter of the ruling Congress party has paid 828,400 rupees ($17,600) to buy each child a 180-square foot (17-square meter) government apartment in Malvani, on the northern outskirts of Mumbai.
"The flats will be given to them within a day or two," he said.
People cannot get government housing if they currently own an apartment, Manhas said. But there is nothing to stop them from getting another apartment after they move in, he added.
"Slumdog" filmmakers have pledged to spend up to 5 million rupees ($106,000) to secure new housing for the children through a trust they set up to help them.
Trustees have said they have already located a flat for Azhar's family near his home and school, and should finalize the deal by next week, while they continue to search for a place for Rubina.
Rubina's father, Rafiq Qureshi, said Friday he hadn't yet decided whether to take the government flat.
Meanwhile, the other residents of the Garib Nagar - "city of the poor" - slum where the children lived continue to make due with tarpaulins strung around sticks and rough wooden shacks, as insecure as ever as they await the coming monsoon rains.
Several dozen homes were destroyed this month as part of a clearance drive. Some residents have already taken out loans from local moneylenders - at 20 percent interest a month - to rebuild their shacks.
The government has no plans to relocate them.
"Accommodating everybody is not possible," said Chief Minister Chavan.
Additional reporting by Rajesh Shah and Manish Mehta in Mumbai.
By Erika Kinetz