The issue was looked at following the Grenfell Tower fire in June 2017 in which 72 people died, partly due to to the poor materials used in the building.
Bishop of Kensington, Rt Rev Graham Tomlin, has been a vocal campaigner for the residents of Grenfell.
He is also the chair of a new commission looking into the housing crisis and told Premier: "I'm very pleased the government's acted in the way that it has because the pressures been growing a bit on the government to act on this particular issue.
"Because it's been a real injustice that leaseholders have been asked to foot the bill to remove the cladding from a lot of the buildings around the country that still have cladding.
"I think the government stepping in and saying 'we will foot at least part of the bill' is just the right thing to do."
The government said the action was being taken because 'private building owners failed to take action and tried to offload costs onto leaseholders'.
Prime Minister Theresa May said: "It is of paramount importance that everybody is able to feel and be safe in their homes.
"That's why we asked building owners in the private sector to take action and make sure appropriate safety measures were in place.
"And we've seen a number of private building owners doing the right thing and taking responsibility, but unfortunately too many are continuing to pass on the costs of removal and replacement to leaseholders.
"Today I can confirm we will now be fully funding the replacement of cladding on high-rise private residential buildings so residents can feel confident they are secure in their homes."
There had previously been concern by homeowners that they would have to foot the bill.
Polly Neate, chief executive of housing charity Shelter said that the time it had taken to decide this was disappointing: "It is a source of deep concern that nearly two years after the devastating Grenfell fire this dangerous cladding is still on buildings.
"It is vital that it is removed as quickly as possible.
"The first priority of any government must be to protect its citizens so we welcome today's announcement.
"We look forward to seeing more detail on the scheme and hope it is able to work quickly and effectively to give residents a safe home."
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