Liz Truss will drive the creation of new "childminder agencies" under a French-style system to slash the cost of childcare, The Telegraph can reveal.
Under radical reforms being considered by the Government, the agencies could be given public money to grow while childminders could also be released from individual Ofsted inspections, with regulation by the watchdog focusing on the agencies instead. Childminders could also be given permission to work from council homes.
In his speech launching the mini-Budget, Kwasi Kwarteng, the Chancellor, promised to break down "barriers for enterprise" by "reforming the supply side of our economy", with childcare identified as a key sector for reform.
As well as representing a significant and growing cost for families, the Government believes that reforming the sector would increase the UK's productivity by giving more parents the option to return to work after having children.
A source familiar with discussions said: "It's one of the few areas where you can make big reforms that don't cost the Government money, but actually have a really positive impact.
"There's not many places left like that."
Boris Johnson's government had previously launched a consultation on changing the staff-to-child ratio in England from one adult to four children so it mirrors the Scottish ratio of one adult to five children.
The Telegraph understands that childminders will be at the centre of Ms Truss's package, with a focus on elevating the role of childminder agencies.
Childminder agencies act as a "one-stop-shop" registering childminders and providing them with training, admin support and marketing services.
Ms Truss helped introduce the agencies when she was children's minister from 2012 to 2014. In a speech in 2013 she said they could "simplify the process for becoming a childminder", working to "spread the cost, reduce the hassle, and use economies of scale to make it cheaper".
While their role remains limited in the UK, the Government believes that boosting the organisations could help reverse a fall in childminder numbers, which have plummeted by 35 per cent since 2015.
Report recommends boosting agencies
Department for Education (DfE) civil servants are also understood to have taken a keen interest in a report published in August by the Policy Exchange think-tank, which recommended boosting the agencies and "removing regulatory burdens" in the sector.
The report recommended helping the agencies to grow by providing a subsidy for every childminder they recruit, while also requiring every current childminder to register with an agency within five years.
Alternatively, the Government could use tax breaks to encourage them to expand.
The agencies already play an integral role in countries such as the Netherlands and France, with childminders coming to work together in the latter in local hubs named "maisons d'assistants maternels".
Both countries were visited earlier this year by Will Quince, the then children's minister, as part of a DfE fact-finding mission.
One recommendation in the Policy Exchange report under consideration would see childminders removed from registration and inspection by Ofsted.
Quality assurance would instead be carried out by childminder agencies, which would remain accountable to Ofsted.
Childminders using council housing
Another area which the Government is understood to be keen to tackle relates to council housing. Currently, many social housing tenants are not allowed to use their dwelling to work as a childminder.
This could be changed to allow childminding to be conducted on social housing premises without exception, increasing the number of childminders while also providing other residents with affordable local childcare.
Organisations in the sector have called on the Government to scrap costly red tape in other areas, such as a legal requirement that childminders must receive a health check from their GP before they are able to work.
Another option for change would be to scrap a rule that childminders can operate for no more than 50 per cent of the time from non-domestic premises, potentially allowing childminders to set up shop on high street locations.
Childcare is likely to form an important policy battleground between Labour and the Conservatives at the next general election.
The Telegraph understands that the Labour leader Sir Keir Starmer has specified that a childcare offer should be one of the flagship policies appearing on the party's "pledge card" to voters.
A DfE spokesman said: "As the Chancellor has confirmed, we will be taking forward reforms to make childcare easier to access and more affordable which will help boost economic growth through getting people back to work. We are exploring a wide range of options, but no decisions have been made."