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Conciliation service Acas will receive an extra £37 million over three years to help prevent workplace disputes, the government has said.

Acas, an independent statutory body formed to improve employment relations, said that the extra funding will be used to expand its helpline and provide more services that could prevent disputes from happening at an early stage.

The minister for employment relations, Pat McFadden, said: "We want to move from the current overly-rigid and legalistic process to one where there is more conciliation between employers and employees.

"This new system will strike a balance between ensuring workers can protect their rights through employment tribunals while helping them to resolve disputes as early as possible."

Acas chair Ed Sweeney said that tough challenges lie ahead for the workplace.

"We are heading into an economic headwind and obviously this presents many challenges for both employers and employees," he said.

"For example, pay disputes in the public and private sectors still need to be resolved, while the eyes of the world will be on Britain as we build towards the 2012 Olympics.

"Good employment relations will be central to delivering a successful games and there will be no leeway in terms of meeting deadlines."

The news follows a recent report by the National Institute of Economic and Social Research, which showed that for every pound spent by Acas, over £16 is returned, generating benefits worth almost £800 million a year to the economy.