Under the scheme,childcare centres must continue to operate,not charge fees and prioritise care for the children of essential workers,as well as vulnerable and disadvantaged children.

Mr Tehan said overall demand for places had now reached 60 per cent of pre-coronavirus levels,but that varied between jurisdictions based on the different conditions and restrictions in place.

The rescue package was introduced for an initial three-month period ending in June,with the option of a three-month extension. Mr Tehan is now in possession of a snap review of the scheme and is poised to announce his decision later this week.

The payments to the labour-intensive childcare sector are designed to operate in tandem with JobKeeper wage subsidy payments. Extra funding is available for exceptional circumstances.

Mr Tehan acknowledged some centres had"limited access"to JobKeeper payments and there was a need to look at how effective the wage subsidy program was for the sector.

Julia Davison,chief executive of Goodstart Early Learning,Australia's largest childcare provider,cautioned against the emergency package being"switched off prematurely"because attendance was still way down on normal levels.

She said many families would be unable to afford fees and"significant tweaking"of the normal state of affairs was needed.

Labor’s early childhood education spokeswoman Amanda Rishworth said the government had not anticipated how quickly demand would return and the limits of the current"blunt instrument"meant families were increasingly being turned away.

"It is becoming acute a lot faster than people thought,"Ms Rishworth said.

Nesha Hutchinson,vice-president of the Australian Childcare Alliance,said there were families trying to access services for the first time but missing out.

"I also know people being pressured to go back to work but can't because their childcare can't guarantee a spot,"she said.

Sam Page,chief executive of Early Childhood Australia,said centres would need to be able to gradually increase their capacity.

"One way or another,they need more than 50 per cent childcare subsidy if we want to build utilisation back to pre-COVID levels,"she said.

Ms Page said many services,especially family day care and in-home care,wanted a return to the regular subsidy system. But the sector is also grappling with the impact a reintroduction of fees would have on demand in an environment of high unemployment and reduced household income.