More parents will be helped into work from 2009 in a bid to help eradicate child poverty in Britain by 2020, the chancellor said today.
The government will invest £765m next year and a further £950m the following year to take 250,000 more children out of poverty, Darling said in his budget statement to the Commons.
He said this would enable Labour to keep to its target of halving child poverty by 2010.
"Even in today's difficult and uncertain times, we are determined that we will not be diverted from our long-term aim - to equip our country for the challenges of the future, confront climate change and to end child poverty in this generation," he said.
Ministers define the child poverty target as ensuring no children live in a household earning less than 60% of national mean income, before housing costs.
Darling sought to reassure welfare campaigners that the government has the funds to meet its pledge of abolishing child poverty by 2020 and of reaching an interim 2010 milestone of halving child poverty.
He stressed the need to get more parents into work if the targets are to be met.
Child benefit payments for a first child will increase to £20 a week from April 2009, Darling said, a year earlier than planned.
A family with two children earning up to £28,000 a year will be £130 a year better off, he added.
To encourage parents into work the rules on housing and council tax benefit will change from October 2009, so families will be better off in work than on benefits.
"In such a tight spending round it is reassuring to see the government is still serious about lifting children out of poverty," said Hilary Fisher, director of the Campaign to End Child Poverty.
"Today's measures will not on their own hit the crucial target of halving child poverty by 2010, but they are an encouraging and important step forward.
"We will increase the pressure on the government this year to keep its child poverty promise."
Liberal Democrat shadow work and pensions secretary, Danny Alexander, condemned the chancellor's package as "a budget designed to appease the rich".
"This budget will be remembered as the day the government abandoned its target to halve child poverty," he said.
"By investing less than a third of what is necessary to halve child poverty, the government has effectively given up on its 2010 target.
"Children in the poorest families will have to wait until next year for even the small scale and highly complex changes announced today to take effect."
Tackling fuel poverty
Darling also announced plans to tackle fuel poverty after recent hikes in energy prices.
Energy companies will be forced to triple the amount they spend each year on helping low-income households with their fuel bills.
At the moment, energy companies spend £50m on social tariffs - special rates for disadvantaged customers - but the chancellor said he was prepared to legislate to ensure this increases to £150m in the years ahead.
A recent report from Energywatch revealed that Britain's energy companies are spending an average of less than 0.5% of their turnover on assisting the rising number of households who are in fuel poverty.
Social energy tariffs reach just 7% of those affected.
The chancellor said the 5 million customers on prepay meters needed to be given a "fair deal", and that energy companies would have to increase their support for these vulnerable customers.
Dave Prentis, general Secretary of public sector union Unison, said the measures on furl poverty didn't go far enough.
"Reducing charges for people using pre-payment meters is only a partial solution to fuel poverty," he said.
"The chancellor should have gone ahead with a windfall tax on the outrageous profits announced by energy companies to help fund the fight against fuel poverty."
Prentis did welcome the announcement that pensioners will receive more help with their fuel bills.
The chancellor said the winter fuel announce for the over 60s will increase this year from £200 to £250, while that for the over 80s will increase from £300 to £400. This will leave 9 million pensioner households better off, he said.
However, the charity Help the Aged said more should be done to help struggling pensioners.
Spokesman Mervyn Kohler said: "It is a badge of shame that Alistair Darling has not taken more decisive action to combat the evils of fuel poverty.
"The one-off increase in the winter fuel payment is nothing more than a sticking plaster which will fail to help pensioners over the long term.
"Older people need far more than gestures while energy prices spiral ever upwards."
Adam Scorer, campaigns director at Energywatch, welcomed the announcement on fuel poverty, but said the devil would be in the detail.
"Identifying the targets [social tariffs and prepayment meters] is
important, but to 'equip Britain for the times ahead' requires a
coherent strategy and determined action.
"We haven't seen much detail on that action will be."
Keyworkers struggling to afford a property were also given a boost.
The government announced that its HomeBuy shared ownership scheme would be replaced with one which offers loan amounts of up to 50% of the value of a home to qualified buyers.
At the moment those eligible for HomeBuy have to afford 75% of the price of a property.
Thames Valley Housing, which manages over 6,000 homes for rent and shared ownership, said it will be participating in the new version of the scheme.