Almost six million workers throughout the UK - more than 500,000 of them in Scotland - will receive an extra four days holidays this year.

There will also be another four extra days next year, under government legislation on holiday entitlement.

After years of protracted negotiations with unions and employers, the Department of Trade and Industry announced yesterday that 5.9m workers in the UK would receive an extra eight days holiday by 2008 as part of their annual leave entitlement, which currently stands at 20 days.

The deal, which was thrashed out before the 2005 General Election by the government and the trade unions, will bring UK workers closer to their European counterparts, who enjoy a more generous holiday entitlement.

Essentially, the legislation stops employers including public holidays in the annual holiday entitlement. They must now be in addition.

Last night, unions were delighted at the government's decision. Graeme Smith, general secretary of the STUC, said: "We are really pleased to see this commitment come forward from government. It is long overdue. Scottish workers work some of the longest hours in Europe and many find it difficult to take time off so this will make a real difference to thousands of families."

The government has wrestled with holiday entitlement, wanting to introduce it in a way that will not alienate the business community.

The Department of Trade and Industry now believes the extra holidays will protect vulnerable workers as well as allowing reputable companies to compete more fairly with firms that gave their employees only the minimum holiday entitlement. The workers who will benefit most from the move are women, part-time workers, low-paid employees and people from ethnic minority communities.

Jim Fitzpatrick, the Employment Relations Minister, said: "Most companies already recognise that good holiday provision makes good business sense.

"Holidays are also important for productivity as they help minimise sick leave and keep people motivated and refreshed. People work hard and they deserve a decent break. We want to make sure everyone gets the holidays they are entitled to."

The changes are expected to cost business around £4bn a year which the DTI said amounted to 0.4% of the total wages bill. The department also pointed out the cost of absenteeism in the workplace, which the new measures are expected to reduce, was estimated at around £11.6bn.

Paul Kenny, general secretary of the GMB union, said the announcement was one of the fruits of the so-called Warwick Agreement reached between trade unions and the government.

"This demonstrates that the affiliation of trade unions to the Labour Party is not entirely a one-way street. An extra eight days holiday for six million workers is something of a milestone that the Labour movement should be proud of," he declared.

John Cridland, deputy director general of the CBI, said: "This is good news for those staff who will see their annual leave increase but it will cost employers £4bn a year.

"With the government considering raising the national minimum wage for 2007, these extra costs must mean there is a smaller wage increase.

"Ministers must be mindful of hitting employers with a double whammy of extra costs." Mr Cridland added that employers welcomed the phasing-in over two years of the extra holidays and said he was pleased the government had listened to business and allowed staff to carry extra leave days over if they and their employers wanted to.

Dave Prentis, general secretary of Unison, said: "Improving the work-life balance of six million will reap enormous benefits both for workers and business and for a small price. Good employers will recognise and welcome this move. Better employers will not wait a year to implement it in full. They will know that a well- treated workforce is more productive."

Fergal Dowling, employment partner with Irwin Mitchell Solicitors, predicted that the measure could lead to a clampdown on sick leave as a result of the improved holiday entitlement.