Steve Hilton came up with the idea as a way of boosting the economy, along with abolishing JobCentres, suspending consumer rights laws for nine months 'to see what would happen' and ignoring some EU employment regulations.
It has been suggested that his ideas were leaked to the Financial Times by civil servants who felt he was undermining their power.
One Whitehall insider told the paper: 'Steve thinks maternity rights are the biggest obstacle to women finding work.'
But Vince Cable, the Business Secretary, dismissed any suggestions of backtracking on EU employment rights or maternity leave.
'That most definitely is not Government policy. Steve is a fine blue skies thinker but this is not part of what we are going to do,' he said.
'We are looking at labour legislation in general but it has got to be sensible and balanced and I think that particular proposal isn't.'
David Cameron, pictured yesterday at the Olympic volleyball site, has known trusted aide Mr Hilton since 1992
One aide said: 'Lots of ideas in Number 10 never get a look-in at all. Steve Hilton has come up with a large number of these.
'The Government is pushing ahead with its policy of more flexible parental leave. A more flexible workforce is a more productive one.'
A No 10 source played down Mr Hilton's ideas, saying: 'He has not suggested scrapping maternity leave altogether, but he did propose how to lessen the burden on small business. This isn't Government policy.'
Mr Hilton's wife, Rachel Whetstone, has combined a high-flying job at Google with motherhood.
When the couple's child was five months old, Mr Hilton was allowed to work from California for Mr Cameron, while the Tories were in opposition.
He was in charge of day-to-day childcare while his wife climbed the corporate ladder.
Mr Cameron's wife Samantha has also managed to balance working at luxury stationer Smythson with bringing up a family.
This is not Mr Hilton's first brush with controversy. He reportedly urged ministers to consider 'cloud-busting' technology which shoots particles to disperse overcast skies.
Old friends: Steve Hilton, who is walk around
Downing Street without shoes, films David Cameron during a visit to a
Mumbai slum while the Tories were in opposition in 2006
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