Maternity pay for new mothers is to rise by £1,400 with paid leave to be increased to nine months by 2007, trade and industry secretary Patricia Hewitt has confirmed.
Other plans include letting maternity pay be given to fathers and extending rights to parents of children up to 17-years-old.
"We have already doubled the length of maternity pay, it was 13 weeks when we were elected, we have already taken it up to 26 weeks,” Hewitt told GMTV’s Sunday programme.
"We are going to extend the pay to nine months by 2007 and the aim is to get it right up to the full 12 months by the end of the next Parliament."
Although Hewitt (left) stressed the plans would be paid for by taxpayers, not employers, business groups warned that small firms could be “crippled” by the move.
"While the majority of any salary costs may be covered by the government's statutory pay, recruitment costs, advertising costs, retraining costs and the strain on the company will not be," said David Frost, director general of the British Chambers of Commerce.
New mothers are currently entitled to 90% of average earnings for the first six weeks after giving birth, followed by £102.80 a week until the baby is six months old.
The government first hinted of the enhanced rights in December last year.