Childcare advocates welcomed the announcement but the Liberal Party warned Labor "promised the world" when it was last in government although the cost of child care actually went up.

If Labor wins the May 18 federal election, childcare costs will be cut for 887,000 families as part of a $4 billion package.

"From next July we will put more money back in the pockets of working Australian families," Mr Shorten told the party faithful at a rally in Melbourne.

"This will save people up to $2,100 per child per year. Under our plan, no family will be worse off."

The majority of families earning up to $69,000 will get their child care absolutely free , which Labor estimates that will affect about 372,000 families.

A further 158,000 families earning up to $100,000 a year will get their subsidies boosted to 85 per cent of the capped daily rate.

And another 357,000 families earning up to $174,000 a year will have their subsidies tapered between 85 and 60 per cent of the daily rate.

Early Childhood Australia welcomed the news and said it would work with an elected Labor government to maximise benefits to children, particularly those at risk of educational disadvantage.

"Labor's pledge on childcare fee relief is good news for families on lower incomes," ECA CEO Samantha Page said in a statement.

Australian Greens education spokesperson Senator Mehreen Faruqi said while Labor's plan is a step in the right direction, it does not abolish the coalition's unfair activity test which has negatively impacted access to child care for disadvantaged families.

"The Greens believe that the 100% subsidy should be extended to more families," she said.

But government minister Alan Tudge warned families that the country has been here before.

"When (Labor) were in government they promised the world like they are doing now but they didn't deliver," Mr Tudge told Sky News

He said prices went up 50 per cent when Labor was in government, but since July last year out of pocket childcare costs have come down nine per cent under his government.

"That's in sharp contrast with what the Labor Party did when they were in government," Mr Tudge.

However, Labor reckons childcare costs under the coalition government have gone up 28 per cent.

Labor is also promising to get the Australian Consumer and Competition Commission to crack down on childcare operators who jack up fees.

"As we give the subsidies to parents, we don't want the operators saying 'mmm yummy, we like that $2000 subsidy and we'll increase the cost of fees'," Mr Shorten told the Nine Network.

"If that doesn't work ... we will look into price controls like we do with health insurers. We want the money to go to parents."

The system for protecting vulnerable children will also be reviewed, with reports suggesting the numbers accessing the Childcare Safety Net have almost halved in nine months, from 35,000 to 21,000.

The announcement builds on Labor's commitment to give every three-year-old in Australia 15 hours of subsidised preschool.

"With 90 per cent of a child's brain development occurring before the age of five, investing in quality early education is one of the smartest investments our nation can make," Mr Shorten says.

Australian Associated Press