A victory for Britain's working parents

TUC's John Monks on the decision

But ministers said on Wednesday that leave will now be extended and backdated to all parents of children under five.

And additional leave has been announced for parents of disabled children, increasing their entitlement from 13 to 18 weeks.

Trade and Industry Secretary Stephen Byers said the changes were the result of recent consultations with parents, and would make "a real difference to their daily struggle of balancing work and family responsibilities".

Further changes will see an extension of the time in which leave must be taken.

Mr Byers said changes would make "a real difference" to parents

Previously, parents had to take their 13-week entitlement before their child was 18 months old.

But new rules will permit leave to be taken over the first 5 years of the child's life.

And parents of disabled children will be allowed to take their 18 weeks at any time before the child turns 18.

Welcoming the concessions, TUC General Secretary John Monks said the decision was "a victory for Britain's working parents".

More action needed

But he stressed that more work was needed to boost family-friendly policies, calling for a right for new mothers to return to work part time and action to stop abuse of fixed term contracts.

On parental leave, Mr Monks highlighted the continued restrictions imposed by employers.

He said: "Unpaid parental leave that can only be taken in blocks of a week with an effective veto by the employer is not flexible enough for most parents."

Mr Monks said he hoped to be able to drop the TUC's challenge in the European Court next week.

The government's desire to resolve the dispute will have been heightened by the knowledge that the TUC's case was set to be led by the prime minister's wife, Cherie Booth QC.

Potentially damaging

But business leaders complained that the extended parental leave was unnecessary and "potentially damaging".

The Confederation of British Industry said: "The cumulative effect of new employment rights is making some smaller firms wonder whether it really is worth employing more people."

And the Institute of Directors said many small firms could face problems if large numbers of staff took parental leave.