The left-of-centre organisation said Gordon Brown should use the extra cash to help Britain's poorest youngsters through the Child Trust Fund.

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Shadow Treasury minister David Hanson said that ministers had rejected Labour's offers for a compromise on plans to axe the Child Trust Fund.

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He said that in "an ideal world" the government would keep the Child Trust Fund but it had to make "difficult choices" over spending cuts.

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It was designed as a tax efficient way for parents to save, without the government kick-starting the pot with seed money - as it did with with the previous scheme, the Child Trust Fund.

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"The junior Isa account that the government is considering as a replacement for the Child Trust Fund will not help children who do not have a parent to save for their future, " Mr Peace said.

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Peers also put questions to the government on education and training for people in prisons and young offenders' institutions, the Child Trust Fund and the effect of local government spending cuts on the government's Big Society agenda.

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If a child left care, the money in their account would be frozen and transferred into their Child Trust Fund when they became 18.

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If you were born between those dates, you got a Child Trust Fund, which was automatically opened by the government.

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