Parents will have to pay childcare fees again from 13 July as demand grows for services.
The government will also stop JobKeeper payments to the sector on 20 July, despite Prime Minister Scott Morrison promising the wage subsidy would be in place for all workers until the end of September.
Instead, every childcare operator will share in a $708 million transition package, equivalent to a quarter of their revenue from the pre-coronavirus period.
Education Minister Dan Tehan said that would be "a tiny bit less" than the sector was receiving in JobKeeper payments, but could not say how much.
"What we have seen is demand grow and grow over the last few weeks so we needed to change the system," he told reporters in Canberra on Monday.
"This system was designed for when demand was falling. Now we are seeing demand increasing."
Education Minister Dan Tehan says demand is growing for child care. Source: AAP
At the start of crisis, attendance at three in 10 centres more than halved and a further five in 10 saw it drop between 20 and 50 per cent.
Child care attendance was back up to 74 per cent of pre-crisis levels in the week starting 11 May.
Activity tests will be eased until October for parents who have lost jobs or hours because of the coronavirus, meaning they can access up to 100 hours of subsidised care.
But they will still have to cover the "gap" portion of fees.
Government subsidies range between 20 per cent and 85 per cent of a baseline fee.
A family on median income would pay $23 a day for long day care plus any extra their centre charges above the baseline rate, which can be quite high in capital cities.
Mr Tehan couldn't guarantee that demand wouldn't go backwards once people who had lost work had to start paying fees again.
"We have consulted with the sector, listened to what they have said will be needed to make sure that demand will continue to grow and we think that we have a package that will work for families going forward," he said.
Opposition early childhood spokeswoman Amanda Rishworth said the cost of care would still be too high even if parents were eligible for more hours.
"What the government said is bad luck - bad luck, you are going to face the same fees that you did prior to this," she told reporters.
"I have great concerns that parents will be sitting around their kitchen tables doing the maths and working out that childcare will just be too expensive for them."
Advocacy group The Parenthood said the government was setting the sector up for a second wave of kids being taken out of care.
People in Australia must stay at least 1.5 metres away from others. Check your state’s restrictions on gathering limits.
Testing for coronavirus is now widely available across Australia. If you are experiencing cold or flu symptoms, arrange a test by calling your doctor or contact the Coronavirus Health Information Hotline on 1800 020 080.
The federal government's coronavirus tracing app COVIDSafe is available for download from your phone's app store.
SBS is committed to informing Australia’s diverse communities about the latest COVID-19 developments. News and information is available in 63 languages at .
