PayPal, the eBay-owned payments company, will be collecting donations from users who interact with the cake on the 'Fancy a Spot of Cake?' app on BBC Children in Need's Facebook page ahead of the appeal event on 18 November.
Users can customise and grow the cake by adding a decoration for £1, icing or sponge for £5 or their own tier for £20. After donating they will be tagged in the cake and can share their activity with their friends via their profile page or on Twitter.
BBC Children in Need is encouraging users to keep returning to the campaign page to watch the cake grow over the coming weeks. It will add "special" layers using exclusive footage from BBC shows, including 'EastEnders', 'Strictly Come Dancing' and 'The One Show'.
It is one of the first charities to collect donations within Facebook and follows Donate to East Africa, which has also collected donations on Facebook, via the Just Giving page.
The 'Fancy a Spot of Cake' app was created and designed by Independents United and built by Gamaroff Digital.
Sarah Monteith, the director of marketing at BBC Children in Need, said: "Our Facebook page has almost 500,000 fans, the biggest of any charity in the UK.
"In turn, it's the perfect platform to launch a first-ever donation driving app."
Follow Sarah Shearman on Twitter @shearmans