After pressure from parents' groups and Labour backbenchers, Gordon Brown is dropping his plan to scrap tax relief on childcare vouchers.
The Prime Minister announced in September that he would be ending the scheme and using the money saved to fund free nursery places for two-year-olds.
However, after 92,000 people signed a petition against the plan and a parliamentary motion defending the vouchers was backed by 88 MPs, it seems he's changed his mind.
Instead, the relief will be applied to all vouchers at the standard income tax rate of 20.
The 340,000 families currently using the vouchers and saving up to £2,392 will not be affected by the change which will apply to new entrants from 2011.
The move was welcomed by childcare campaigners who've fought hard to keep the scheme which they argue helps enable parents to work, thereby supporting the economy.
Here on ParentDish we reported on parents' objections to the planned closure of the scheme, and the growing campaign against the cuts.
Mr Brown claimed he'd always been 'in listening mode' on the subject, but his change of heart has led to Conservative accusations that his policy is 'in chaos'.
The apparent u-turn also means that plans to introduce 250,000 free nursery places for two-year-olds by 2015 will be significantly delayed.
Do you think Gordon Brown is listening to parents or is government policy on childcare in a mess?Suggest a correction