An extra class will be added and the school will employ another teacher and teaching assistant.
The new class will make use of an existing classroom, previously used by a community group. An additional 15 places will be made available and these will be allocated in line with the admissions criteria.
The extra places will allow for more children from Peasedown St John to go to their local school.
Councillor Chris Watt (Con, Midsomer Norton Redfield), cabinet member for children's services, said: "Bath and North East Somerset Council's school organisation team makes every effort to plan for the number of children who will apply to schools each year. This is why plans are already in place that take into account the increased birth rate for the 2011 and 2012 intakes.
"However, this year more people than usual are choosing to send their children to local authority schools, perhaps due to factors such as the recession, a trend which we are seeing nationally.
"By working closely with the school governors, who have been positive and supportive in their response to this unusual situation and the action that needs to be taken, I am pleased that we have been able to find a solution which will allow more local children to have the chance to attend their local school."