The aid, which had been due to expire August 15, will be extended for six months -- crucial in a nation with a 24.63-percent jobless rate, the highest in the industrialized world.

The aim is that "people without means won't find themselves without state support," Deputy Prime Minister Soraya Saenz de Santamaria told a news conference after a cabinet meeting.

Regular unemployment benefits last a maximum of two years in Spain depending on how long a worker has made social security contributions.

The benefit will be raised to 450 euros for recipients who have a dependant spouse or partner and at least two children, the deputy premier said.

Those living with a parent or grandparent earning at least 481 euros a month would be excluded from the benefit, however.

The payment is a lifeline to many people, with official data showing 1.74 million households with no member in work.

Spain said it would approve on April 31 a new reform aimed at improving supervision of the banking sector, in line with a deal struck with the euro zone in return for a 100-billion-rescue loan for crisis-hit banks.

The new legislation boosts the ratio of rock solid "core capital" banks must hold on the books to nine percent from eight percent of all assets, while easing the takeover and possible liquidation of banks judged to be non-viable.