deduction u/s 10(32)

Yes...Exemption is available inrespect of:

Income of a minor child up to Rs.1,500 in respect of each minor child whose income is includible (CLUBBED WITH INCOME OF HIS FATHER OR MOTHER)under section 64(1A). Section 10(32).

It is apllicable in A.yr-2008-09 also....

income of minor child (except some income such as income generate by minor child from manualwork or any activity involving his talent /special knowledge/experiance)will be first included in the income of his parent u/s 64(1a) under other source income then after a deduction of Rs 1500/amount included (which ever is less) in respect of each child will be deductable.

there is no restruction about only two child

Provision about two child is given deduction under head salaries

in respect of childern education allowance 100/month and allowance for hostel expenses300/month maximum two child.