One million extra childcare places will be made available by 2010 under plans unveiled in the pre-Budget report.
One million extra childcare places will be made available
This will be done by boosting the UK's network of children's centres and getting schools to open from 8am to 6pm, at a cost of £600m by 2007/08.
Chancellor Gordon Brown also increased paid maternity leave from six to nine months and proposed an extension of flexible working rights for parents.
Many parents will also get £50 per week help with the costs of childcare.
From April 2005, all employer-supported childcare, not just childcare in work-based nurseries, will qualify for National Insurance (NI) and income tax relief, capped at £50 a week.
Previously, parents had received help only with employer-managed childcare.
The Chancellor said he was making extra provision for childcare to create a "family-friendly welfare state" aimed at boosting the economy.
"The successful economies and societies of the next 20 years will also invest in the potential of all children," the Chancellor told MPs.
The childcare measures say:
Schools should open from 8am to 6pm to meet working parents' childcare needs by 2008
The number of Sure Start children's centres, which offer educational and health care support, will be increased to 3,500 from 600 by 2010
From 2007 paid maternity leave will be extended to nine months from six with the aim of a further increase to 12 months by the end of the next parliament
Mothers will have the right to transfer their entitlement to paid leave to the father. At present, fathers have the right to two weeks' paid paternity leave
Three and four year old children will be given free nursery education for at least 15 hours a week for 38 weeks a year by April 2007
Maximum maternity pay and child benefits for mothers at home with their first
child will rise to £8,300 by 2007
The government will consult on allowing parents with children over the age of six to ask their employers for flexible working arrangements
- Childcare tax credit will cover 80% of the costs up to £170 for the first child and
£300 for two or more children
The government to top up the Child Trust Fund, due to come into force next April, for the "poorest children in poverty" at age seven.
The measures announced all form part of the government's 10-year childcare strategy.
A recent report by the Daycare Trust, a childcare charity, concluded that a comprehensive package of early education, care and parental leave could boost the UK economy by between £12bn and £24bn a year.
Elizabeth Reid, a spokeswoman for Daycare Trust, told BBC News that she welcomed the government's childcare steps.
"These measures will make a very big difference to parents' lives. There will be real help with the costs of childcare and better overall provision," Ms Reid said.
Anne Longfield, chief executive of the 4Children charity, formerly the kids' club network, hailed the pre-Budget report as marking "a defining moment in the country's attitude to supporting children and families."
However, 4Children added that the likely cost to the government of carrying out key elements of its childcare strategy would run into many billions of pounds.
Paying for half of schools to remain open between 8am and 6pm alone would cost £1.4bn a year over the next six years, the charity estimated.
Other major political parties also see childcare provision as a significant issue.
Theresa May, Conservative spokeswoman for the family, accused Labour of failing to deliver on "spin and promises" over childcare.
"It is all very well for Mr Brown to promise a million new childcare places,
but since 1999, for every two places that have opened, one has closed," Ms May said.
In November, Conservative leader Michael Howard said that, if elected, he would increase paternity pay and consult on making childcare costs tax deductible.
The Liberal Democrats have said they would introduce Early Years Centres offering pre-school education, health check-ups and play areas.
Steve Webb, Liberal Democrat Work and Pensions spokesman said he would like to simply the tax credit system to enable parents to claim more easily.