Childcare will be free for parents still using it during the coronavirus crisis.
The government will also support the nation's 13,000 childcare centres to remain open after enrolment and attendance numbers plummeted.
Prime Minister Scott Morrison said childcare was an essential service to keep all parents who still had jobs in the current economy in work.
Under the plan, the government will pay half the reasonable fee cap to centres for the next six months as long as they remain open and don't charge parents any fees.
The funding will start from 6 April and will cover enrolments as they stood in the fortnight leading up to 2 March, before people started pulling their kids out of care en-masse due to losing their jobs or out of health fears.
The means and activity-testing of fee subsidies will be dropped while the new system is in place.
Centres must also seek to re-enrol children who have been withdrawn, to make sure parents can keep places if they need them once the crisis is passed.
Education Minister Dan Tehan said the aim was to make sure parents won't have to worry about trying to find new care for their children.
"What we want to do by doing this is ensure that your childcare centre will remain open, so that you know where you normally take your child to get cared, that that will be there for you, so you are not looking to have to go to a new centre," he told reporters on Thursday.
It's also expected the childcare sector will be able to access some $1 billion in the JobKeeper wage subsidy payments.
Wages account for more than 60 per cent of a centre's expenses.
