The new guardianship arrangement are thought to be particularly appropriate for some older children who do not wish to be legally separated from their birth parents, even though they cannot live with them and for some minority ethnic communities who may have religious and cultural difficulties with children being adopted,

Mr Hutton said: "Children only get one chance to grow up and growing up in a stable, strong family provides the best opportunity for young people to thrive and develop.

"We are committed to modernising the adoption process to help transform the lives of hundreds of children, and in doing so we believe that society will reap the benefits as well.

"A safe and loving permanent family who will support them throughout their childhood and beyond provides these vulnerable children with the emotional support and stable environment they need to fulfil their potential. This will benefit individual children and their families, as well as society as a whole.

"In the past many looked-after children have suffered because of the failings of the care system."

He told MPs that 70 per cent of children leave care without any GSCEs or GNVQs and many girls leave care either pregnant or as mothers. Nearly 40 per cent of male prisoners under 21 have been in care, and people who have been in care are 60 times more likely to become homeless.

"This isn't good enough," said Mr Hutton. "The Quality Protects programme is helping to make a difference for looked-after children, with local authorities working hard to provide safe, effective and high quality services for them. But we need to do more.

"We need to change these appalling statistics - we need to give looked after children the same life chances as any other child.

"Where they cannot return to their birth families, adoption can help give children in care these better life chances.

"That is why the Government is committed to a 40 per cent increase in adoptions from care. By modernising and overhauling adoption law the new Adoption and Children Bill will play a vital role in the Government's drive to get many more looked-after children adopted."

Currently council adoption rates of children from care vary greatly - ranging between 0.5 per cent to and 10.5 per cent. The average time a child spends in care before the decision is made that they should be adopted is one year, four months. It then take an average of another seven months to find them an adoptive family.

Approximately 58,000 children are looked after by councils in England at any one time. There were 2,700 adoptions of children from care in 1999/2000 and nationally, social services spent nearly £45m on adoption and adoption allowances in 1998-99. The Government has made available another £66m over three years towards adoption services.

The new Bill takes on board many of the recommendations published in an Adoption White Paper in December which was drawn up by a review of adoption policy, commissioned by Prime Minister Tony Blair last year.

New legislation has been long awaited and the Government came in for criticism last autumn when, against expectations, an Adoption Bill was not included among new leglislation in this year's Queen's Speech.

At the time, the leading adoption organisation in the UK, the British Agencies for Adoption and Fostering, expressed disappointment.

But it accepted that with a possible short Parliamentary session ahead because a looming General Election, it was perhaps better for any new legislation to be put before the first term of a new Government when there would be more Parliamentary time to ensure that new laws were properly drafted.

However, all that changed when, during the height of media interest in the the case of the American twins adopted via the internet by Alan and Judith Kilshaw, Mr Blair made a commitment that new adoption laws would be published as soon as possible.

A spokeswoman for the Department of Health was unable to tell Adoption-net what would happen to the Bill if there were a General Election in May and Parlimentary time for the Bill ran out but she said that ministers had pledged that the Bill would be on the statute books by the end of December.

In response to the first reading of the Bill, Felicity Collier, chief executive of BAAF welcomed a promise by ministers that the Bill would be given adequate time for proper consultation and debate in Parliament.

She said: "We only get one opportunity in a generation for reforming adoption law and it is vital that the Government gets it right. We will look at the detail of the Bill with great interest and offer the Government our advice and support throughout the consultation period.

"Reducing delay for children is vitally important but we are pleased that the announcement today also recognises the importance of safeguarding children via new powers to regulate internet adoption.

"The prohibition of advertising children on the Internet, except by approved adoption agencies will give a clear message to the rest of the world that we are determined to protect the interests of children."

"Possibly the most important measure of all is the duty to be placed on local authorities to provide post-adoptive support.

"We believe that this will make a real difference to adoptive parents who often parent troubled and challenging children and that this will encourage more prospective adopters to come forward.

"We also welcome the recognition that adoption will not be the preferred option for all children who need a permanent and secure family and that therefore a special guardianship order will be introduced."

As well as the new Bill, Mr Hutton also announced new funding of more than £500,000 in the next financial year for adoption projects around the country, many of which aim to help adopted children settle into their new homes.

One project - The National Development project - run by the Manchester-based organisation, After Adoption, will help develop post-adoption support services as promised in the White Paper.

It is hoped that better and comprehensive post adoption support will reduce the number of unsuccessful adoptions which are said to run at about 5 per cent for young children to 10-20 per cent for children aged up to 10 years, although reliable figures on breakdowns are hard to come by.

Children in care experience high levels of mental health problems. One study in Oxfordshire has found that two out three had significant psychiatric disorders, with even higher rates among children in residential care.

A new Adoption and Permanence Partnership Council was also announced yesterday. This will support the work of the Adoption and Permanence Taskforce, which was launched last year.

The Taskforce is made up of 33 part-time members, all experienced practitioners in adoption, working in social services, the voluntary and the independent sector. It aims to offer practical help for authorities and help them draw up and implement individual development plans on adoption. The first 11 councils to be offered help were identified last year and preliminary visits have already taken place.

The partnership council is more of a think-tank on where adoption policy should be heading in the future and its make-up of members reflects this role with a wider range of experiences and political views.

Members include, journalists, social workers, self-help group leaders, the head of the British Agencies for Adoption and Foster Felicity Collier and the highly vocal critic of the current adoption system Liv O'Hanlon, director the pressure group the Adoption Forum.

Click here to find out exactly who is on the Taskforce and new partnership council.

Mr Hutton said: "We have already begun the process of encouraging social services departments to see adoption as a positive, responsible choice, and this has paid off.

"There is already a steady rise in the number of adoptions taking place. But we need to keep the momentum going, and the Partnership Council and the Taskforce will play an important role in that."

Mr Hutton also referred to new regulations under the Adoption (Intercounty Aspects) Act 1999 to tighten up the procedures and protect children adopted from abroad which will be put in place Later this month.

They will mean that only people approved for adoption in this country will be able to adopt children from other countries.

People who bring a child from another country into the UK for the purpose of adoption, without first being approved as adopters here, will be committing a criminal offence punishable by up to to three months in jail and/or a fine of up to £5,000.

Mr Hutton said Parliament would be considering if further safeguards on international adoption were needed and, if necessary, more legislation would be included in the Adoption and Children Bill as it passed through Parliament.

Copies of the White Paper and information about adoption procedures, adoption legislation, guidance, international conventions, useful addresses and statistics are available at the Government's adoption website.

The new Adoption and Children Act in full