The Government is considering the introduction of both an additional childcare payment and a tax allowance as part of its childcare package to be announced in next Wednesday's Budget.
Minister for Finance Brian Cowen and his officials are holding detailed discussions with members of the Government and officials in other departments on the proposals.
The final package has yet to be agreed, although it is now expected to include a tax break for people minding children in their own homes and plans for improving maternity leave.
Aspects of the package, such as increasing maternity leave, will be rolled out over a number of years. It is believed that Mr Cowen is looking at introducing a new childcare payment to be paid through the child benefit system on a per month basis for every child under six.
The payment would not be means-tested or taxed and is expected to be one of the most expensive aspects of the package.
The Government has been given figures suggesting that if it made a €150 per month payment for every child under six in the State, the cost would be in the region of €700 million. It is expected that the payment will be considerably less than this. The introduction of a €50 payment per month from January for under-sixes would cost just under €240 million.
Mr Cowen is also examining the introduction of a tax allowance for parents which would give a rebate of up to a quarter of annual childcare costs - in the region of €8,000 in Dublin.
The Government is also believed to have examined the introduction of a voucher system. However, Ministers are concerned about the additional administration costs of introducing such a system.
They are also concerned that this system appears to be old-fashioned and is redolent of traditional welfare hand-out schemes, such as butter vouchers, which have long been abandoned.
Mr Cowen and his officials are looking at both a new childcare payment and a tax allowance or credit for parents.
Amid concerns that tax allowances will favour better-paid families, Mr Cowen is also expected to include a package aimed at addressing child poverty through increases in income supplements to low-income families.
The Government is still considering the expansion of maternity leave. There have been discussions among ministers on the general aim of increasing maternity leave to six months and on the possibility of an additional six months of paid parental leave, to be taken by either the mother or the father. Government sources expect a "start" to be made in the Budget on increasing maternity leave above the current level of 18 weeks, with a commitment to reaching 26 weeks over a period of time.
Mr Cowen is also expected to announce funding for a Department of Education initiative aimed at expanding pre-school places. Funding for post-school childcare facilities on school sites is also likely to be part of the package.
A tax-free allowance of between €8,000 and €10,000 for people minding children in their own homes is also expected.