By Rosemary Bennett, Political Correspondent

The government is to cut value added tax on sanitary towels and tampons from 17.5 per cent to 5 per cent from next year at a cost to the Treasury of £35m a year.

The move was welcomed by Labour's female MPs who have lobbied the chancellor on the issue over the past year. The three female ministers in the Treasury are also thought to have been instrumental. Gordon Brown decided against announcing the measure to parliament himself leaving it to Dawn Primarolo, paymaster general.

"This measure is good for women and good for children," said Fiona MacTaggart, MP for Slough. "In every quartile of every income group, women are the least well paid. For families with low income, especially where there are a large number of women in the family, sanitary protection can be a big chunk of the family budget. So as well as targeting women this is targeting children."

The move was also seen as reflecting the government's desire to hold on to the substantial number of female voters that defected to Labour at the last election.

Five per cent is the lowest rate to which the government can cut VAT under European Union law. However, there are moves under way in the European parliament to enable countries to zero-rate the products.

At present VAT rates on sanitary products vary across the EU. Women in Austria pay 20 per cent. Other rates are: Belgium 21; Denmark 25; Finland 22; France 20.6; Germany 16; Greece 18; Ireland 21; Italy 20; Luxembourg 15; Netherlands 17.5; Portugal 17; Spain 16; and Sweden 25.

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