The scheme will be introduced earlier than expected, with all working parents with children under 12 and earning more than £50 a week and less than £150,000 per year qualifying when it launches in autumn 2015.

When it was originally announced a year ago, ministers said the maximum support available would be £1,200 per child.

Deputy Prime Minister, Nick Clegg said the package would “provide a childcare boost for millions of hardworking families”.

Under the new rules, for every 80p parents pay towards childcare costs, the government will pay 20p up to £2,000 per year per child.

Ministers said the new scheme will benefit more than twice as many families as the current voucher system, which is offered by employers.

The new scheme will not rely on employers offering the scheme and any working family can use the scheme, provided they meet the scheme’s eligibility requirements.

The scheme will also be available to self-employed workers, parents on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave.

Prime Minister David Cameron said: “Tax free childcare is an important part of our long-term economic plan. It will help millions of hard-pressed families with their childcare costs and provide financial security for the future.”

When the scheme launches, parents will no longer be able to register for Employer-Supported Childcare, but those already registered before the launch date will be able to continue using it for as long as their employer offers it.

Parents will be able to open an online account, which they can pay into to cover the cost of childcare with a registered provider.