The Turnbull Government admits the childcare system is broken and needs a "complete overhaul" amid reports fees will rise more than 20 per cent over the next four years.
NewsCorp Australia reports that Department of Education documents show child care costs will hit $157 a day in Brisbane, $175 in Melbourne and $223 in Sydney by 2020.
The government says the current average across the country for 10 hours of long day care is $88, NewsCorp reports.
Responding to media reports, Education and Training Minister Simon Birmingham conceded the current system needed a "complete overhaul".
"That is why our legislation before the Parliament brings in hourly rate caps to drive downward pressure on price increases," Birmingham said on Sunday.
"The Turnbull Government has comprehensive child care reforms to address problems many hardworking families face. The current system isn't working for them now and won't in the future unless we achieve significant reform.
"That's why the Turnbull Government's early education and care reforms represent increased investment that will make the system more accessible, affordable and fairer for around one million Australians, with low and middle income families the greatest beneficiaries from the package."
The government wants to pass a $3 billion childcare package through parliament that includes the removal of a $7500 payment cap for families earning less than $185,710.
Opposition childhood education spokeswoman Kate Ellis told NewsCorp that the coalition was failing on childcare fees.
"The Liberals promised more affordable child care, but their own figures show fees will keep going up just as fast," she's quoted as saying. "If parents can't afford to go back to work, it's bad for family budgets and bad for our economy."
Opposition climate change spokesman Mark Butler said the government wanted to cut family payments to pay for their childcare changes.
"We've seen utter inertia in this area, which is placing real pressure on working families, to find the places that they need and to be able to afford childcare if they're lucky enough to find a place," Butler told ABC television.
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