Labor is challenging Prime Minister Tony Abbott to guarantee that no family will be worse off as a result of an inquiry into Australia's childcare system.
Mr Abbott on Sunday announced the terms of reference for a Productivity Commission review into the childcare sector, prompting claims from the opposition that exiting programs could face funding cuts.
It's the first major review of Australia's childcare and early learning sector since the 1990s, and fulfils an election promise from the Abbott government for a review within 12 months of taking office.
The commission will invite ideas from the community and childcare sector about ways the system can be more flexible, affordable and accessible for Australia's modern families.
Mr Abbott said the childcare needs of Australian families were significantly different today than they were a generation ago, and reform was needed to boost productivity and workplace participation.
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"We need a childcare system which acknowledges the needs of the modern Australian family, and the needs of the contemporary Australian workforce," he told reporters from Colombo on Sunday.
But federal Labor quickly warned the Abbott government against making changes that would harm existing funding arrangements, such as tinkering with the 50 per cent childcare rebate.
Labor senate leader Penny Wong said means-testing the rebate would seriously disadvantage second-income earners, the vast majority of whom are women.
"You'd have to be very careful if you were the Abbott government going down this path, that you didn't in fact set up a set of disincentives for women to participate in the workforce," she told Network Ten on Sunday.
Opposition spokeswoman for early childhood Kate Ellis said the government had ruled out more money for the childcare sector, meaning any new programs would have to come at the expense of existing ones.
"We have seen time and time again, Liberal governments commissioning reviews just in the lead up to announcing deep cuts," she told reporters in Adelaide on Sunday.
"There is absolutely no reason why Tony Abbott should not guarantee that no family will be worse off as a result of this review if he's not using it as an excuse for cuts."
The inquiry will consider rebates and subsidies available for each type of care, and other options within the current funding arrangements.
The Australian government is the largest funder of the childcare sector, and its expenditure of more than $5 billion every year is forecast to grow in coming years.
In 2012, nearly 20,000 childcare and early-learning services had more than 1.3 million children enrolled in at least one childcare or preschool program.
