Internet classroom Oak National Academy created the library after schools moved to remote learning for the majority of pupils until February half-term.
Formed with The National Literacy Trust, the library will provide a book a week from its author of the week.
The aim is to increase young readers’ access to e-books and audiobooks, particularly the most disadvantaged.
Oak National Academy is funded by the Department for Education and has provided more than 28 million lessons since the start of the school term on 4 January.
In the last two weeks, 4.1 million pupils accessed its resources.
The latest lockdown has seen schools in England close except for children of key workers and vulnerable pupils.
Matt Hood, principal of Oak National Academy, said: “It’s incredible to be able to add to our offer something vital for children’s literacy and their mental wellbeing.”
Jonathan Douglas, chief executive of the National Literacy Trust, said it was “essential” to enable as many children as possible to “access a world of great literature”.
He added: “Many children’s literacy skills were profoundly affected by the first lockdown and school closures.
“We will do everything in our power to support children, families and teachers during this new lockdown period.”
Describing the virtual library as a “fantastic resource”, Education Secretary Gavin Williamson said learning and children’s development must continue while schools remain closed.
He said: “Reading is hugely beneficial not only for children’s literacy skills, but also their mental health and wellbeing.”
The first book to feature will be Dame Jacqueline Wilson’s The Story Of Tracy Beaker, and will be available to access free for a week from 17 January.
Dame Jacqueline said with schools closed, the free online library is needed more than ever, adding: “I think it’s vitally important that every child should have an opportunity to access books.”