In his autumn statement, presented in the House of Commons, Osborne said the government will invest an extra £380m a year by 2014/15 to expand the number of childcare places for two-year-olds from 130,000 to 260,000.
"I can tell the House today that we can double the number of children who will receive this free nursery care. Forty per cent of two-year-olds, 260,000 children, from the most disadvantaged families, will get this support in their early years," Osborne said.
"Education, early years learning; that is how you change the life chances of our least well off and genuinely lift children out of poverty," he added.
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