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