The Federal Government will withdraw its free childcare scheme next month, reintroducing childcare subsidies for parents while ending the JobKeeper payment for workers in the sector.

The scheme was introduced in April with the aim of keeping providers afloat during the coronavirus pandemic. But changes announced by Federal Education Minister Dan Tehan today will see free childcare come to an end on July 12, with a three-month, $700 million support package to be offered to the sector from the following day.

Under the changes, parents will go back to paying for their children's care, with the reintroduction of the Child Care Subsidy, but the Government will loosen the criteria for subsidised care for families hit by the economic downturn.

Rick Maggi