Chancellor Gordon Brown set out his vision of a "family friendly" welfare state yesterday as he put extra help for working parents at the heart of his annual Pre-Budget Report.

His Commons statement included a blueprint for an ambitious ten-year childcare strategy, with nine months' paid maternity leave transferable between mothers and fathers, if Labour is re-elected.

However, his financial credibility came under sustained attack after the opposition and City economists warned that he was in real danger of breaching his own "golden rule" on managing the public finances.

And employers expressed concern about the cost to business of implementing his measures on family friendly working.

In a statement geared towards the expected General Election in May, Mr Brown promised an extra £1bn for local authorities in England to stave off big council tax rises, a freeze in fuel duty and a £50 increase in the winter fuel allowance for the over-70s.

He also delivered an upbeat assessment of the prospects for the economy, forecasting another year of above-trend growth of between three per cent and 3.5 per cent in 2005, shrugging off warnings of a slowdown.

He insisted he would meet his "golden rule" of balancing the budget over the course of the economic cycle with £8bn to spare, despite another increase in projected Government borrowing.

Net borrowing is now expected to be £34bn this year and £33bn, £29bn, £28bn, £24bn and £22bn in the following years.

In the City, some economists dismissed his predictions as "wishful thinking".

David Page, of Investec Securities, said: "His forecast that he will meet the golden rule with a margin of £8bn is way too optimistic. It's going to take a significant turnaround in the economy to meet these targets."

For the Tories, shadow chancellor Oliver Letwin said that Mr Brown was now "isolated" among economists in believing that his golden rule could be met.

The Chancellor, however, defied critics of his handling of the public finances by concentrating much of the Pre-Budget Report on his ten-year framework for childcare.

His statement was being seen by some MPs as a personal manifesto from a man who still has ambitions to be Prime Minister, after last week's Queen's Speech which focused heavily on crime and security measures.

Mr Brown said that his aim was to create "a welfare state that is truly family friendly for the first time in its history".

His package included a £285m injection to extend paid maternity leave from six months to nine, with parents able to transfer leave from the mother to the father.

He promised an extension of childcare with free nursery education for three and four-year-olds increased to 15 hours from April 2007. Funds would be provided to keep schools open from 8am to 6pm to look after children while their parents are at work.

From April, employers will be able to offer staff an extra £50-a-week tax-free for childcare, while childcare tax credit will be increased.

The Government is also to consult on extending the right of employees to request flexible working arrangements to the parents of older children.

The announcement was warmly welcomed by the trade unions as a "significant extension of the welfare state", but the Confederation of British Industry expressed concerns about the cost.

"The constructive relationship between government and business on this issue could come under serious strain if ministers move too far too quickly," said CBI director general Digby Jones.

There will be a one-year, £40-a-week bonus for lone parents who return to work while a £40-a-week payment to help former Incapacity Benefit claimants back to work would be extended.

Mr Brown said Child Trust Funds - so-called baby bonds - would be increased so that the £250 and £500 downpayments at birth would be doubled at seven years old.

The Chancellor said he would consult on extending the Individual Savings Account limit for another five years to 2009. And the Savings Gateway scheme, whereby the Government matches the savings of low income families, will be extended to a wider range of income groups.