Parents are to receive tax breaks worth up to £140 a week to hire nannies to look after their children, the government has said.
Hiring a nanny can be expensive
The Child Tax Credit is being extended to cover carers who look after children in their parents' homes - but not relatives such as grandparents.
The credit, currently available only for nurseries and childminders, will also cover children's activity clubs.
Families earning up to £58,000 a year will be eligible to claim it.
The amount the tax credit is worth varies according to how much a family earns.
It can be worth as much as 70% of the weekly childcare bill, up to a maximum of £94.50 a week for one child and £140 for two.
Family members such as grandparents have been excluded from the scheme as it would be "inappropriate" to bring money into family arrangements, ministers say.
But after-school and holiday clubs offering sports and other activities are to be included for the first time.
Children's minister Margaret Hodge said the move would create 10,000 approved childcarers.
And it would "show mums and dads Labour is on their side,
understands the pressures they face nowadays, and is coming up with new ways to
help them balance work and family life".
"We will be taking every opportunity we can to ram home the message that
the Tories are committed to cutting childcare as part of their plans to cut an
immediate £18bn from public spending," Ms Hodge added.
Conservative George Osborne agreed more help with childcare was welcome but warned government schemes often got tied up with red tape.
Liberal Democrat work and pensions spokesman Steve Webb welcomed the move, so long as proper safeguards were put in place to prevent fraudulent claims.
Ms Hodge is to launch public consultation on the proposals on Monday.
They are expected to come into effect in April 2005.