Chancellor Angela Merkel’s centre-right coalition struck an agreement on Monday on controversial welfare reform ahead of next September’s federal elections.
Merkel’s Christan Democrats and its junior partner, the pro-business Free Democrats, agreed to increase child benefits and scrap a health surcharge after talks at the weekend.
Hermann Gröhe, CDU secretary general, said: “We want to help those on a low wage, those who cannot do full-time work and those who have important responsibilities in terms of caring for the elderly or young children.”
From August 1st, parents who look after their offspring at home will receive 100 euros a month per child until their second birthday.
Critics say this will put women off working and prevent children of foreign immigrants from learning German in kindergarten.
In return, the FDP won its demand to scrap a ten-euro fee, which is payable quarterly by German patients for visits to the doctor.
They argued it created unnecessary red tape and did nothing to cut waiting times.