Paid time off for new mothers should be doubled to a year, Children's Minister Margaret Hodge has said.
Mothers get six months leave at present
Some of the time should be reserved for "daddy leave" to give new fathers more time with their children, she argued.
The evidence showed parents had a "critical" role to play in a child's first 12 months, she said.
But bosses union the CBI said the plan would cause problems for smaller firms and may provoke a backlash from employees without children.
In a speech to the Social Market Foundation think tank in London, Mrs Hodge said: "One possibility we can and I think we should consider, could be to extend paid maternity leave for a further six months."
At the moment, mothers are entitled to take 26 paid weeks off work after the birth of a child.
Fathers can take two weeks' paid paternity leave.
Mrs Hodge said she had come back "full of envy" from a recent visit to Sweden, which spends five times as much of its national wealth as England on services linked to the early years of children's lives.
"Their investment in services is matched by their more generous settlement for parents with better and longer paid leave for both mothers and fathers," she said.
"And providing that support to parents, particularly after the baby is born has to be part of what we are about."
She said both parents should have the opportunity to stay at home during the first year of a child's life.
"All the research confirms the important role fathers - as well as mothers - play in their children's lives.
"Yet too few fathers take time out of work in the first year of their child's life to care for their baby."
Measures such as reserving a portion of leave that could only be taken by fathers - daddy leave - might be one way to encourage fathers to spend more time at home, she said.
Mrs Hodge told BBC Radio 4's World At One the idea was not an election campaign "gimmick" and said the government had ruled out further changes until 2006.
The minister stressed she did not want a compulsory system but she claimed it was not as difficult to make changes as some critics claimed.
"We need to work with employers, of course we do," she added.
The government is expected to fight the next general election on a platform of investing more money in the early years of children's lives.
Earlier this month, Prime Minister Tony Blair said he wanted to introduce free part-time nursery schooling for two-year-olds in poor parts of the country.
Eventually, he said, the government wanted to see universal schooling for under-fives.
Susan Anderson, from the Confederation of British Industry, argued employers were already giving staff more flexibility under recently introduced regulations.
The new proposals would cause difficulties especially for small firms, she said.
And there "could be a backlash from non-parents who start to resent their colleagues with young children getting so much time off".
Conservative spokesman Henry Bellingham said new employment rights needed time to settle before more were contemplated.
"Far from benefiting employees, what this will do is break down the trust between employer and employee," he said.