Families on low incomes working less than 16 hours a week will benefit from childcare support from 2013, the government has said.
An additional £300 million will be allocated for the move on top of the £2 billion already spent under the current childcare system.
The government said the changes would benefit 80,000 more families.
Currently, childcare support is only available for people working 16 hours or more, but the minimum hours rule is to be removed so that all families receiving Universal Credit will be eligible for financial help.
The move is worth up to £175 for one child or £300 for two or more children per week, the government said.
Work and pensions secretary Iain Duncan Smith said: “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.
“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.”
Charities welcomed the proposals but said more could still be done to make childcare affordable.
The Daycare Trust said the extra funding was evidence the government had listened to the concerns of parents who are struggling with childcare costs.
Offering childcare support to an additional 80,000 families will help parents to move in to work, which is the best way for them to lift their families out of poverty,” said the organisation’s chief executive Anand Shukla.