The Australian government will commit to paid parental leave from January 2011 for those earning less than $A150,000 a year.
Treasurer Wayne Swan, who will hand down his second budget on Tuesday, said the scheme will pay the federal minimum wage for 18 weeks and will be funded by the government, not business.
"This is a very significant reform," Mr Swan told the [Nine Network. "We are one of only two countries in the western world that doesn't have paid parental leave."
He said the scheme will be of particular benefit to low and middle income earners.
Under the scheme, which will start on 1 January 2011, the primary carer will receive 18 weeks post-natal leave, paid at the adult federal minimum wage, which is currently $A543.78 per week.
The scheme will cost about $A260 million a year.