The change is part of a new national child poverty strategy and will offer immediate financial relief to struggling families.
Islington is one of the most unequal boroughs in the UK, with areas including Finsbury Park, Holloway, Archway and parts of Clerkenwell facing high levels of deprivation.
Despite many parents being in work, families have been pushed to the edge by high housing costs, rising bills and stagnant wages.
An estimated 5,940 children in the borough will benefit from the removal of the cap.
Prime Minister Keir Starmer said: “This government is picking up the tab for a failed social experiment that punished working families and pushed hundreds of thousands of children into poverty.
“We will not stand by while more children are dragged into hardship.”
The two-child limit, introduced in 2017, has been described by the Prime Minister as a “failed social experiment.”
Around 300,000 children are in poverty directly because of the policy.
Mark Russell, chief executive of The Children’s Society, said: “Removing the two child limit is a landmark moment for children.
“Families stretched to the limit will feel immediate relief.
“It is a bold and welcome decision.”
Alison Garnham, CEO of the Child Poverty Action Group, said: “Lifting children out of poverty is morally right and strengthens the country.
“This is an important step toward a future where no child grows up in hardship.”
