The Local Government Association described Chancellor Gordon Brown's pledge to refund VAT paid by local authorities on children's services as a "lobbying triumph" for councils.
"Removing VAT removes an arbitrary barrier to local authorities achieving goals set by central government for the providing of children's services," said councillor James Kempton, vice chair of the association's children and young people board.
Organisations including the Pre-school Learning Alliance hoped this was a move towards extending the tax break to charities, and the National Day Nurseries Association repeated calls for tax breaks for all childcare providers.
Childcare organisations also welcomed an extra 25m in 2006/07 and 2007/08 for early learning schemes run through Sure Start programmes and children's centres.
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