Maternity pay was also increased to nine months, under moves which the Government said would increase equality and flexibility in Britain's workplaces.
Trade and Industry Secretary Alan Johnson published the Work and Families Bill which he said aimed to create a modern framework of employment rights.
He maintained the bill would have a minimal impact on business despite concerns, especially from smaller firms, that they will suffer because of the new rights.
Under the Bill fathers will be entitled to extra paternity leave if a mother returns to work after six months and before her maternity leave ends.
The Department of Trade and Industry said up to 440,000 fathers could benefit from the plan, which will now go out to consultation.
Mr Johnson said: "Today's bill delivers on our commitment to help working parents balance the demands of their job with caring for their children by introducing a modern framework of rights and responsibilities that offers real choice and flexibility.
"To help mothers we will extend paid maternity leave to nine months with the aim of increasing it to a year.
"Increasingly fathers want to play a more active role in bringing up their children so we will help them take time off when the mother returns to work by introducing a new right to paternity leave."
Mr Johnson maintained there was broad support from both sides of industry for the "family friendly" measures and he said he was also introducing a number of proposals to make it easier for businesses to deal with workers taking time off.
Under the Bill statutory maternity pay will be increased to nine months from April 2007 with the ambition of moving it to a year by the end of the current Parliament.
A new power will be introduced to give paternity leave for fathers so they can benefit from leave and statutory pay if the mother returns to work after six months but before the end of her maternity leave period.
The right to request flexible working, currently limited to parents of young children, will be extended to carers from April 2007.
The Government also announced that it wanted to introduce so called "keeping in touch days" so that women on maternity leave can go into work for a few days without losing their statutory pay.
The period of notice for returning to work from maternity leave will be extended to two months.
Unions and campaigners for fathers' rights warmly welcomed today's announcement.Reuse content