About 100,000 families are missing out on up to $7500 in childcare assistance, government figures reveal.
The Minister for Childcare, Kate Ellis, told The Sun-Herald her department had identified a significant number of families who were not receiving money they were entitled to.
''A lot of families aren't eligible for the childcare benefit but don't realise they are covered by the childcare rebate,'' Ms Ellis said. ''There are many families missing out.''
The federal government gives financial assistance to families to help with the cost of childcare through two payments.
One is the means-tested childcare benefit and the other is the non-means-tested rebate, which pays families up to $7500 a year for each child for out-of-pocket childcare expenses.
The confusion surrounding the two payments has left some families who are eligible for the rebate to mistakenly believe they are not entitled to it.
Despite the confusion, Ms Ellis said there were no plans to change the payment system.
Government figures compiled for The Sun-Herald also show the average annual payment to families under the childcare rebate is well under the maximum amount. The average amount claimed last financial year was $2100.
Only 6669 families received the full amount, a reflection of how most parents rely on combinations of childcare, help from relatives and part-time work.
And only 24 per cent families have taken up the government's offer to pay their rebate each fortnight rather than at the end of the quarter or financial year.
In NSW 60,416 families out of 238,400 eligible families receive the payment fortnightly.
Anecdotal evidence suggests some families receive it as a lump sum because it acts as an enforced savings program.
''Different families structure their budgets in different ways,'' Ms Ellis said.
''It's up to individual families which option they choose. There are families struggling to make payments and, for them, fortnightly payments work well.''
But she also reminded parents they could change the frequency of their rebate payments at any time.
''I think there was concern that parents thought they would be locked out if they didn't make the change [in their payment schedule] by the end of the financial year,'' Ms Ellis said.
''We want to let parents know they can still make the change.''