Thousands of two-year-olds in the country's most disadvantaged areas will be given free nursery education as part of an "innovative" project announced by the Chancellor.
Ministers have been convinced the time is right to extend nursery education to children at such a young age by research showing that a class gap in their ability to master basic skills first emerges by the age of 22 months.
In his speech, Gordon Brown said: "Having already achieved nursery education for every three and four-year-old - and having achieved this six months ahead of plans - we will pilot, in an innovative experiment, the extension of nursery education to two-year-olds."
Nursery education places will be given to 12,000 two-year-olds in 500 pilot areas by 2008.
Maria Carlton, spokeswoman for the National Confederation of Parent Teacher Associations, said: "It is welcome because parents aren't always picking things up about their child's development but it needs to be enjoyable rather than more formalised education. Parents also need to be given advice on how they should follow it up at home."
Dr Mary Bousted, general secretary of the Association of Teachers and Lecturers, gave the scheme "a cautious welcome".
"It is all very well increasing the quantity but it must be of a high quality," she said. "What provision is given to two-year-olds must be right for them and not just a watered-down version of what is currently given to children at the age of three."
The pledge - which Mr Brown said would ensure that "while the 19th century was distinguished by the introduction of primary education for all and the 20th century by the introduction of secondary education for all, so the early part of the 21st century should be marked by the introduction of pre-school provision for the under-fives" - formed part of a rise in spending on education from £63bn a year in 2004/5 to £77bn in 2007/8, a real terms increase of 5.2 per cent a year.
Today David Miliband, the Minister for School Standards, is expected to tell MPs that spending on primary schools will rise by five per cent next year and on secondaries by four per cent. Schools will eventually receive a three-year budget settlement.
Part of the rise in spending will also be used to hire more classroom assistants to give teachers more time off to improve their skills, Mr Brown added.
David Hart, general secretary of the National Association of Head Teachers, said: "Schools deserve and need this extra cash. The Government spending plans promise significant extra resources but this will only do the trick if the money actually goes to the front line and is not diverted by bureaucracy."
Meanwhile, a vice-chancellor who was among the most critical of the Government's decision to allow top-up fees of up to £3,000 a year from 2006, announced that his university would be charging the maximum fee for all courses.
Dr Michael Goldstein, vice-chancellor of Coventry University, said the decision was "not something which has been taken lightly." It was taken to ensure that certain courses were not seen as more "exclusive" than others.
He added: "We all recognise that concerns about debt affect students from all backgrounds so we are determined to take some of this worry away from them." A bursary scheme will help the less well-off fund their way through university.
Yesterday's comprehensive spending review paved the way for the fees shake-up, which is expected to net universities an extra £1bn a year to help them meet a Government target of getting 50 per cent of youngsters into higher education by 2010.
Department for Education and Skills
Spending in 1996-97: £35bn
Spending in 2002-03: £51bn
(Increase: 45.7 per cent)
Civil servants: 5,220
Future spending: Will rise from £63bn in 2004/5 to £77bn in 2007/8
Where money will go: a pilot to extend nursery education to two-year-olds, a network of 2,500 Children's Centres by 2008, 1,000 more specialist secondary schools and 200 City Academies, spending per pupil in state schools up to £5,500 by 2008, more classroom assistants.