The 19-year-old, from Burntwood, Staffordshire, died in May after launching an appeal in aid of the Teenage Cancer Trust.
It said £2.9m of the £4.96m raised through donations and Gift Aid would be invested in specialist cancer units for young people.
Stephen’s mother Jane said she was “immensely proud” of his legacy.
The trust announced seven hospitals in England and Scotland would receive contributions towards creating or improving cancer units, with others to be announced in future.
It also outlined plans for the remainder of the Stephen’s Story fund.
The trust said £1.2m ($1.9m) would be invested in training future cancer nurses and support staff.
The money will partly be used to fund 50 care scholarships at Coventry University over five years, “in recognition of [Stephen’s] ambition to have a medical career”.
A further £700,000 will be spent on improving the charity’s cancer information services and helping patients attend its annual weekend conference.
£2.9m plans for specialist cancer units
Edinburgh: A four-bed Teenage Cancer Trust (TCT) unit for 16 to 24 year olds will open at the city’s new Children’s Hospital. Stephen’s Story will contribute £360,000.
Glasgow: A contribution of £270,000 will complete a £500,000 fundraising bid launched last year for a six-bed TCT unit for 13 to 16 year olds at the new Southern General Hospital.
Liverpool: Stephen’s Story will contribute £317,400 towards a new TCT unit at Alder Hey in the Park. This will leave £150,000 to be raised locally to hit the target of £600,000 by April 2015.
London: The Trust said its 18-bed unit at University College Hospital was in “desperate need” of refurbishment. A £168,000 donation will add to £192,000 already raised by other supporters to enable work to be completed.
Nottingham: Stephen’s Story will contribute £815,000 to create a new unit at the Queen’s Medical Centre and improve its facilities at City Hospital.
Oxford: A £60,000 contribution will be made towards a new unit at the Churchill Hospital.
Sheffield: Stephen’s Story will invest £144,000 in improving and updating a five-bed unit at Weston Park Hospital.
The trust said the remaining £2.9m would be allocated at a later date.
Stephen’s campaign, which received about 340,000 donations, attracted global attention after a photo of the teenager went viral online.
A two-day memorial vigil held in his honour at Lichfield Cathedral drew thousands of well-wishers.
Mrs Sutton said the response to her son’s “courageous and inspirational” campaign had been “humbling”.
“I am so proud and I think this would’ve been beyond even Stephen’s wildest dreams,” she said.
“He originally aimed to raise £10,000 but that amount has been raised 500 times over and the money is still coming in.
“It will make a significant difference to other young people with cancer and that would have made Stephen very happy.”
The Teenage Cancer Trust said Stephen’s efforts had “allowed us to be more ambitious”, but the charity would continue to raise money under the Stephen’s Story banner.
Fundraising manager Kate Collins said specialist units were needed because it was “really easily for young people with cancer to feel isolated”.
“They either get treated as a child on a children’s ward or treated on an oncology ward where people are two, three times their age,” she said.
“Cancer is terrifying at any point in your life but the money that’s been raised will help us to support every young person that needs us because there’s a lot more that needs to be done.”