Who is eligible?

A parent that earns less than �40,000 Credit reduced for a parent earning over �34,000 Families still qualify if both parents each earn less than �34,000, despite having a joint income over the threshold

The credit will be worth about �525 a year, according to Mike Brewer, senior research economist at the Institute for Fiscal Studies.

Mr Brewer attributed the slow take-up to tax-payers not knowing about the credit, adding that in the past it has taken two to three years before everyone has become aware of a new tax measure.

Detractors have blamed the growing complexity of the UK tax system for the lack of registrations.

Feel-good factor

The CTC is among a raft of measures in the Budget that targets families.

Mr Brown has also increased maternity pay and announced a rise in another tax credit for low-paid workers, called the working families' tax credit.

Mr Brown is looking to target certain groups of people

Tax credits are part of a new strategy by the government to use the tax system in the same way as the benefits system.

The tax system allows the government to target certain priority groups within the population.

"The danger of a targeted tax credit is that people have to claim it," said Mr Brewer.

This means eligible tax-payers that have not claimed the credit will miss out on the "feel-good factor" - valuable for the government if it calls a general election in May.

By contrast, people will always benefit from tax cuts without needing to claim them.

Missed out?

The CTC is aimed at low and middle income families. Any individual earning over �40,000 does not qualify.

Only 3.1 million have actually signed up prior to a deadline set at the end of February.

Tony Blair is not eligible for the children's tax credit

However, Mr Brewer points out that those who have not signed up can still claim backdated tax credits.

They will merely miss out on receiving the credit immediately.

The shortfall in claims could save the government at least �40m, according to the Financial Times newspaper.

This figure could increase to almost �500m if those eligible tax-payers have still not signed up in a year's time, the newspaper added.

Not working

The government's working families' tax credit has also failed to attract all of the tax-payers that are eligible, according to the Financial Times.

The newspaper reports that 300,000 people - out of an estimated 1.4m - did not register for the working families' tax credit 18 months after its introduction.

This is despite a �12m publicity campaign in September 1999 to alert low-income families to the new credit.

And, unlike the children's tax credit, those who have not yet signed up will not be able to backdate their claims.

Also, the National Association of Citizens Advice Bureau indicated last month that many families are losing out on other benefits, such as free school meals, as a result of signing up.

In more extreme cases, the Bureau found that some parents had been sacked from their jobs because their employers believed the tax break would cause too much administrative hassle.

In addition, 1.1 million pensioners are not claiming the income support to which they are entitled, according to figures released by the Department of Social Security.

This amounts to about �1.7bn a year.