The $1.6 billion overhaul of the nation's childcare funding platform begins on Sunday night, temporarily replacing the current childcare funding system.

The package has been welcomed by some providers given that, before its announcement on Thursday, some industry bodies had warned that many centres would be forced to close as parents withdrew their children and refused to pay fees as they lost their jobs.

However Lynette Fitz Henry, children's services co-ordinator at Thrive Kids - which is run by Port Stephens Council and operates family day care and after school care services in Port Stephens and Newcastle, said the free program could halve the income of both centres and Family Day Care educators.

Ms Fitz Henry said the JobKeeper payment had been cited to "balance" the free childcare program, however she warned not all childcare services would be able to access it - including those operated by local government such as Thrive.

"These operators will be severely impacted," she said.

"The childcare subsidy system as it exists finishes at midnight on Sunday so we need to finalise all our submission for funding by midnight which means we are having staff trying to submit this weekend and come Monday it's a whole new childcare situation."

"Just imagine that my centre is full and I receive 100 per cent of the money that I am charging in fees, either from the parents or the government with the child care subsidy.

"The government is saying, 'We'll pay you half of that'."

Ms Fitz Henry said while some childcare centres currently had a much lower enrolment number after parents withdrew their kids, they may now face a situation where demand rose but there was no financial incentive in place to compensate.

"Now the government has made childcare free a lot of those who have chosen to withdraw their kids will start using childcare again and we might end up with the same amount again, but we'll only get 50 per cent of our fees," she said.

In the case of family day care educators who work from their own homes, she said there was no incentive for them to take on more children if there was no certainty of compensation from the government.

Ms Fitz Henry said while the government had told childcare educators they could apply for the JobKeeper payment, not every educator would be eligible depending on their individual circumstances.

"They must have an ABN and there is other criteria but they need to speak to their financial advisor or accountant, everyone will be impacted on a case-by-case basis," she said.

Newcastle family day care educator Amanda Colburt said yesterday she was devastated when she learnt of the temporary reform, which she estimates will slash her income from $1600 gross to $320.

"Before all this happened, because I am family day care I was at full capacity, because people feel safer sending their child to a smaller environment with less germs," she said.

While she supports families getting free childcare in the crisis, she said it was ridiculous she was being made to work 10-hour days for a greatly reduced wage that would not not cover her rent, groceries and support her self-employed husband, whose work had dried up, and two children.

She said she had been advised she could apply for the JobKeeper subsidy which would bring in $700 a week however it would not flow through until May.

"In the meantime, I am working for $320 a week, less my expenses, providing nappies, milk, wet wipes, electricity, and so on," she said. "I am working for a reduced amount of money when realistically none of the families that bring their children here have had their incomes affected - but somehow I am expected to turn up and work and it doesn't even cover my grocery bill. How does that work?"

"You do not do this job for money, people do it because they love children, I should not be penalised for it."

In addition to her woes, Mrs Colburt said she had been informed by her service that she was facing an administration fee of $1.45 per child per hour, which equated to a $58 expense for her each day.

Sean Scanlon, chief executive officer of the Catholic Diocese of Maitland-Newcastle, on Friday welcomed the Morrison government's relief package for early childhood and care services across Australia.

"While we're still working through the details to understand what implications the announcement will have on our staff and families, initial indications are very positive," Mr Scanlon said.

The Catholic Diocese of Maitland-Newcastle is one of the region's largest providers of early education, with eight St Nicholas Early Education centres across Newcastle and the Lower Hunter. It is also one of the region's main providers of before and after school care, and vacation care, with St Nicholas OOSH operating from 17 sites across Newcastle, the Hunter and Manning, caring for children in Catholic and non-Catholic schools. In total, the not-for-profit agency employs more than 250 staff.

Mr Scanlon said that he expected many families would be "overjoyed" with the news of increased government subsidies.

"We have been in constant communication with parents and carers over the last weeks, we know how much pressure some of our families are facing."