LIKE thousands of working mothers, every morning Liz Dunn takes her children to school before heading for the office. But for Liz, going into work means going back home, taking a seat at the desk in the spare room and switching on her computer.

The mother-of-two is one of an increasing number of employees who are taking up the option of working from home as a way of combining being a parent with holding down a full-time job.

And her solution is one of a range of possible measures under consideration by the Government, employers and trade unions as part of a debate over how parents can balance their responsibilities at home and work.

Liz, 37, who is BT's e-business development manager for the North-East, was given the chance to work from home six months after the birth of her eldest daughter Rebecca, now eight. And, after spending a few months making a lengthy daily trip from her home in the North Yorkshire village of Great Ayton to BT's offices in Sunderland, she leapt at the opportunity.

"When I first went back to work, I was travelling into Thornaby to drop Rebecca off and then going to Sunderland and back again to pick her up," says Liz. "It was a real hassle, and it meant not seeing the children from about 7.30 in the morning to about six at night. If I hadn't been able to work at home, I would have struggled and it would have cost me a lot more. It has made my life a lot easier."

The new arrangements also mean Liz, whose youngest daughter Jennifer is four, has a flexible working day; she works in the evening and at weekends to make up for hours lost during the day.

One of the biggest obstacles for many working parents is childcare, both in finding someone suitable and ensuring the cost is not prohibitive. But Liz has been so impressed with the after-school club and holiday play scheme at the nearby Roseberry Primary School, she has become the play scheme's treasurer.

"I have been really fortunate. I have an excellent childminder living not far from me in the village and my parents are in the village as well and that really helps," she says. "Without the extra help from the after-school club and the play scheme it would have been very difficult because with the children being so young, I couldn't work with them at home."

The problem of childcare is one of the issues the Government is to tackle in a review of how to encourage parents to go back to work, helping them balance their responsibilities towards their employer and their children. About two thirds of women now return to work within a short time of giving birth, compared with just under half ten years ago.

The debate comes after Chancellor Gordon Brown announced a review of maternity pay and parental leave in this year's budget. And Trade and Industry Secretary Stephen Byers is in Newcastle today to take part in a discussion on the possible options, bringing together social services, charities, trade unions, community groups, business leaders and health trusts throughout the North-East.

The debate will take in issues including working from home, flexible hours and childcare, with the Government pledging to listen to all sides before drawing up proposals later this year, although no legislation will be introduced before the next election. And it comes on top of Education Secretary David Blunkett's pledge last month to provide nursery places for every three-year-old by 2004, at a cost of £2bn.

But the plans have already provoked concern among business leaders that the additional burden could prove crippling to many small and medium-sized firms. Proposals under consideration could see employees given a right to take 13 weeks off a year in the first five years of their child's life. And extensions on maternity leave could give new mothers the right to come back to work part time.

Angus Hynd, assistant regional director of the CBI North-East, will be putting the business sector's concerns over the new proposals at today's meeting.

He says: "Leaving aside the issue of whether the parental leave is paid or unpaid, if somebody is taking 13 weeks off a year, you have got an administrative concern.

"And if somebody is coming back part time after maternity leave then they are changing the nature of the job and that puts quite an onerous burden on businesses. These proposals are being brought in rather more quickly than we would like."

Mr Hynd says the CBI would like issues of parental leave, maternity leave and childcare to be left up to the individual companies, without the need for Government interference.

"It really has to be done on a company by company basis and every company has to be treated differently. It is for the workforce and management to work together to find a solution that suits everybody's requirements," he says. "Competitive firms recognise that their staff are their best asset. Employers are the best people to decide what goes on in their own companies, not the Government imposing regulations.

"There is a danger of regulations coming in which are costly to enforce and ruin a company's competitiveness. It is fine for people to say parental leave should be paid, but they have to realise there is a cost and that has to be borne by business and the workforce.

"Business in general and the CBI are very concerned about the cost of new regulations that have hit companies since this Government came to power," he adds. "The working time directive and the national minimum wage - all of these are increasing costs and these have to be met."

"We don't want to be alarmist but there is no question that some businesses are saying the cost of implementing these regulations is quite severe. There is a balance to be struck."

Liz Dunn might well have carried on working for BT even if she had not been able to work from home, but she is in no doubt that the change has made her life considerably easier.

The problem now will be finding a delicate balance between encouraging more parents like Liz to return to work, and not increasing the burden so much that their jobs are priced out of existence.