Hundreds of thousands of children will be guaranteed subsidised early childhood education, as a "catch-22" that stopped parents from accessing help is scrapped.
The three-day guarantee, first announced by Prime Minister Anthony Albanese in late 2024, will replace the previous government's activity test that provided subsidies to families earning up to $530,000.
Parents will receive a guaranteed minimum of three days of subsidised child care a week, regardless of how much they work or study, after the change took effect at the start of the new year.
The Parenthood campaign director Maddy Butler said the old rules prohibited many families from accessing care, with up to 126,000 children set to benefit from the change.
"It was essentially a catch-22," she said.
"To access paid work for many parents, they needed care, yet without the care, they couldn't access paid work.
"This is a really important step in ensuring that families from disadvantaged backgrounds are able to access early learning and care."
Ms Butler said child care should be free for all low-income families, with a fixed-fee model of $10 a day for all other families.
Treasurer Jim Chalmers said the change was a move towards a more universal system.
"For too long now, the activity test has locked out Australian kids from early education because of the choices that their parents might make about work or study," he said.
"The three-day guarantee is all about recognising that the work that happens here is not babysitting, it's not child minding - it's a really important part of the education system."
Goodstart Early Learning deputy chief executive Jeff Harvie said a "serious barrier" to early learning had been removed.
"Children's access to learning and better life outcomes should not be restricted by the circumstances and work choices of their parents," he said.
A report by the Productivity Commission in September 2024 recommended scrapping the activity test because it was hurting families who needed it most, without leading to "substantial" increases in workforce participation.
The activity test required each parent to work, study or look for work for at least 16 hours each fortnight to access 72 hours of subsidised care, the amount now assured through the three-day guarantee.
The government is investing $430 million across four years to deliver the policy.
