Those with one child will be able to claim £951 and those with two or more can claim £1,630 to help with the cost of childcare. This is an increase from £646 and £1,108 respectively.

The £900m funding boost for low-income families was first announced in the Spring Budget along with a huge shake up to the free hour allowance which is available to the majority of parents.

The Government said the change will mean eligible families can claim an extra £522 per month to put towards childcare costs.

It comes as the childcare system, even with the planned changes, has been criticised as unfairly benefitting higher earners.

85% of fees paid when parents enter work or increase their hours

The Government said it will also support parents who enter work or increase their working hours with the first month of childcare fees. They will receive 85% of their childcare costs before the next month’s bills are due.

This is in contrast to the current system whereby parents must pay for fees upfront and then claim a refund.

In the Spring Budget, a complete overhaul of the childcare system was announced. Parents who are eligible for 30 free childcare hours, who earn a minimum of £152 a week and a maximum of £100,000 a year, will be able to access these hours when their child is nine months.

The system will be in place from September 2024, and there will be a phased introduction before, from April 2024.

It comes amid mounting pressure from parents, who pay the highest fees in the developed world for childcare, and providers, many of which are struggling to keep their doors open because of rising costs.

Mel Stride, secretary of state for work and pensions, said: “These changes will help thousands of parents progress their career without compromising the quality of the care that their children receive.

“By helping more parents to re-enter and progress in work, we will be able to cut inactivity and help grow the economy.”

A consultation has also been launched to boost the workforce in the year years sector in England. There will also be a recruitment campaign next year to try and attract and retain new staff.