Thousands more low-income working families will be eligible for housing and council tax benefit under a radical change to the rules announced yesterday.

In a last ditch attempt to make progress on ambitious child poverty targets, Alistair Darling announced child benefit would no longer be taken into account when low-paid families apply for the two benefits.

Treasury officials calculate the changes mean a household with one child, and one parent working full-time on the minimum wage, would be £17 a week better off from October 2009 when the changes come into effect.

In a second move, Mr Darling brought forward by a year a planned increase in child benefit to £20 a week for the first child.

The changes, along with extra spending on tax credits, mean a further 250,000 children will be lifted out of poverty by 2010, although the government will still fail to meets its target of halving child poverty by a considerable margin.

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