The proposed boost to the childcare subsidy will be scrapped if crèches increase prices a planned, Children's Minister Katherine Zappone has warned.
The Minister wants to increase the Early Years supports budget by up to €150 million but Finance Minister Paschal Donohoe has warned this might not happen if it's found that childcare providers are over-charging parents.
The Affordable Childcare Scheme goes live today and parents of children aged up to three years are entitled to a grant of €80 per month.
A separate means-tested subsidy for children up to 15-years-old will also be extended.
The money is paid directly to the childcare provider, who is then expected to deduct it from the family's fees.
Some providers have complained about the amount of administration involved in the scheme and there have been concerns that crèches will take advantage of the subsidy by increasing their prices.
Ms Zappone urged providers to "show restraint", as she told the Irish Independent that she will impose price caps if people hike their charges.
She said: "I am asking providers to show restraint when it comes to fees.
"To do otherwise would weaken arguments for the increased levels of investment needed to bring our childcare system even close to international norms."
She said that she hopes that the subsidy will make things easier for parents.
Minister Zappone explained: "Every year there are some fee increases.
"This is acceptable when it can be clearly demonstrated in a transparent way that they are to meet pay needs, improve quality and always in consultation with parents.
"What cannot be defend are unexpected price increases which leave parents with little or no option but to pay up. This is not acceptable...
"If over the coming weeks or months those figures were to rise then I will take action.
"Possible actions could include regulation or price capping for Government schemes.
"What could be far more damaging though in the long term will be the erosion of public confidence."