Osborne: Working grandparents will be given legal right to take time off and care for grandchildren

The plan will involve extending the current system of shared parental leave to cover grandparents as well as the child's mother and father.

The total of 50 weeks of leave will not be extended, but the plan is aimed at giving greater flexibility to families in the first year of a child's life.

Parents will be able to share up to 50 weeks of leave and up to 37 weeks of parental leave pay, currently £139.58 a week or 90% of average weekly earnings, whichever is lower, with a nominated working grandparent.

Mr Osborne hopes it will allow working parents to return to work more quickly if they want to by giving them the option of sharing part of their leave entitlement with one of their parents.

The Conservatives believe the policy will particularly benefit single mothers, who cannot currently choose to share parental leave but will now be able to do so with one of their child's grandparents.

The Chancellor said more than half of all mothers rely on grandparents for childcare when they first return to work after having a baby.

"In many families, grandparents play a central role in caring for their grandchildren and helping to keep down the costs of childcare," he said.

"Increasing numbers of grandparents, however, also want to remain in work themselves. Research shows two million grandparents have either given up a job, reduced their hours or taken time off work to look after their grandchildren.

"Allowing them instead to share leave with their children will keep thousands more in the workplace, which is good for our economy."

A similar policy was proposed by Labour's Harriet Harman in a woman's manifesto ahead of the general election.

But Mr Osborne claimed the policy for the Conservatives as their party conference began in Manchester.

"This is a modern Conservative policy that backs working families and gives them the freedom to choose what will work best for them," he said.

"We will work with employers to make sure that we introduce this as simply as possible.

"It's an opportunity for employers who want to retain older members of their workforce, who might otherwise choose to leave the workforce permanently."

Employment minister Priti Patel denied the policy had been stolen from Labour.

"I don't agree with that one bit because we have been very clear we've put childcare at the centre of Government policy," she told Sky News's Murnaghan programme.

"We made it quite clear in the general election and in our manifesto that we were increasing the amount of free childcare from 15 hours to 30 hours for working families ... for three to four-year-olds, that builds upon what we did in the last parliament, where we also introduced free childcare for two-year-olds from low-income families.

"This is a continuation of what we've been doing."

Ms Patel, "a working mum myself", added: "Let's be clear, when it comes to British politics today, the Conservative Party are in the centre ground, when you see the Labour Party completely lurching to the left.

"Specifically on the point of childcare, childcare should never be a political issue at all. We've been very clear that we are the party for working families."

Adam Marshall, executive director of the British Chambers of Commerce, said: "Another change to parental leave policy is the last thing businesses need after a decade of upheaval.

"The last set of changes hasn't even bedded in yet and many firms will be astonished that the government has decided to intervene yet again.

"Most employers are sympathetic when parents or grandparents need flexibility to help with caring duties, and many go out of their way to accommodate affected staff.

"But adding new legislation - and increasing the administrative headache and uncertainty businesses already face - is not the way to go."