In his speech, the chancellor George Osborne said that the childcare element of the Working Families Tax credit would reduce to 70 per cent. Parents will also now have to work at least 24 hours a week to meet the new criteria.
Currently parents are able to recoup up to 80 per cent of their childcare costs.
The drop to a maximum of 70 per cent means that working parents, who can currently claim the maximum of £240 a week, will in future only be able to claim up to £210 a week.
The National Day Nurseries Association said they were concerned about how the cut would impact on low-income families and nursery owners.
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