Childcare support will be available to 80,000 more UK families, the government has revealed.
An extra £300 million will be invested into childcare support as part of the government's Universal Credit scheme. The requirement to work 16 hours or more will also be dropped, thereby allowing more low-income families to take advantage of childcare support.
So far, families are able to claim up to 70% of childcare costs, provided they work at least 16 hours a week. How much they receive depends on their income.
"We are determined to help more parents take their first steps into work but under the current minimum hours rule parents are trapped in state dependency without the childcare support they badly need - providing yet another barrier to work," says Work and Pensions secretary Iain Duncan Smith.
"Under Universal Credit more people will receive support for childcare than they do now. Parents will be able to work the hours to suit their families and receive the childcare support they deserve," he adds.
Deputy Prime Minister Nick Clegg also welcomes the announcement, calling it "really good news, especially for lone parents and mums up and down the country".
Children's charity the Daycare Trust applauds the move and in a statement says the government "has listened to the concerns of parents across the country".
However, while the cash injection means most parents won't receive any less childcare support under Universal Credit (due to start in 2013,) than they currently do under tax credits, the poorest families will still suffer, says the Daycare Trust.
"It still amounts to a significant reduction in support for the poorest families who currently receive 95.5% of their childcare costs through housing benefit."
In the next four years, the 19 million claims under existing out-of-work benefits and tax credits system will be reduced to eight million claims under Universal Credit.
The Daycare Trust's statement concludes: "In future Budgets we would like to see further incentives for parents to work with an increase in the proportion of childcare costs covered, starting with an increase to 80% as soon as possible."