Trade and industry secretary Patricia Hewitt today confirmed that maternity pay for new mothers is to rise by £1,400 as paid leave is increased to nine months by 2007.
Other plans include letting maternity pay be given to fathers and extending rights to parents of children up to 17-years-old.
TUC General Secretary Brendan Barber said: "The proposals announced today would make a real difference to the lives of working parents and go a long way towards making their lives less stressful.
"It is also good to see the government considering extending the right to request to work flexibly to carers and the parents of older children - everyone at work should be able to benefit from a better work-life balance."
Dave Prentis, general secretary of public sector union Unison, added: "This is good news for parents, children and business. Allowing more flexibility will relieve some of the stress on working parents and a less stressed workforce is a more productive one.
"For too long big business has shirked its responsibilities to the next generation of workers and these measures will help to even up the balance," he said.
"Business will also reap the benefit because they will not lose trained and experienced workers through inflexible working arrangements.”