The capital's 33 boroughs will be urged to take part in the three-year Pounds 33m London Childcare Affordability Programme when they meet representatives of the London Development Agency on 28 April.
Two-thirds of the funding will come from the LDA and the remaining third from the Sure Start Unit for the programme, which will involve childcare providers submitting bids through the boroughs.
The affordability scheme is being promoted as a form of London weighting for childcare, with supply-side funding to providers to help bridge the gap between what parents receive in tax credits and the relatively high cost of childcare places in the capital.
In the first year 5m will be spent on the affordability scheme and a pilot to compensate providers who offer part-time workers flexible childcare arrangements. Both pilots will be evaluated by the DfES.
Mrs Hodge urged local authorities and childcare providers to come up with 'imaginative ideas' for targeting support to those who need it most. She added, 'We hope to share the best ideas across the country.'
Ken Livingstone said, 'This is important for thousands of families across London. Funding is now in place which will ensure that more families will have access to full-time daycare. This could be the equivalent of an extra Pounds 1,500 a year for some families. There will also be much-needed flexible childcare for part-time workers.'
Denise Freeland, senior childcare manager at the LDA, said two-thirds of the boroughs had already expressed an interest in taking part in the affordability scheme.
'I want to get all 33 boroughs to engage with this because if they don't families who need support won't get it,' she added.
She said the assistance for part-time workers stemmed from a recognition that many were having to pay for full-time daycare as their hours straddled part of both morning and afternoon sessions in nurseries. To alleviate this burden on parents, she said, providers would be compensated for 'the difference between what a part-time working parent actually needs and what they are being charged'.
She also confirmed that the LDA plans to help providers fill childcare places that are increasingly being left empty on Mondays and Fridays.
Mrs Hodge said the joint initiatives by the DfES, LDA and the Greater London Authority were consistent with the Government's aim set out in its ten-year strategy to 'revolutionise childcare for parents and children across the country'.
She added, 'Already the Government has made childcare more affordable for many through the tax credit system, but there is more to be done. By contributing 11m to this joint programme with the GLA and the London Development Agency, the Government is recognising the real need to provide affordable, flexible childcare in London.'
Manny Lewis, LDA chief executive, said, 'London childcare costs are rising considerably faster than in the rest of the country. For many London families the prohibitive costs of quality childcare act as a barrier to employment. We will provide childcare that is cost-effective and available at times that enables them to contribute to the London economy.'
The LDA said it has already invested more than 3m in childcare between 2003 and 2005, mainly focused on gap-funding for neighbourhood nurseries.
