Is it for 1 or 2 weeks and which month would you wish to travel?
One week in June or Sept you might meet your budget of £1000, but 2 weeks in July or August, even with a free childs place you might need to double it.
A good place to start might be
http://www.eclipsedirect.co.uk and
http://www.portlandholidays.co.uk put in your dates, 2 adults & 2 children, AI or HB and see what the sites come up with.
If it seems expensive you could then try to DIY by checking flight websites and accommodation only web-sites.
Generally speaking on packages, places outside the Eurozone seem to be cheaper, ie Egypt Red Sea, Turkey, Tunisia etc.
Places that are cheaper to DIY are those that are about 2 hours away and the Budget carriers fly to ie Algarve, France, The Costas, but then you need to be prepared to travel on Easyjet, Ryanair or similar.