Ignite Minds' network of educators working out of their own homes across Bendigo and central Victoria could see a 65 per cent drop in revenue under the plan, founder Ujjval Goble said.

"We're very concerned. It's a major problem because family day care enrolments have been growing during this crisis," he said.

"Parents see them as safer places than long day-care centres because they are smaller."

More news:

The services are also popular with those who work late, like emergency workers, because family day care often allows more flexibility for care outside traditional hours and at short notice, Mr Goble said.

"So this is a sector that was really stepping up to support Australia during this time. To have the rug pulled from underneath it is really quite devastating," he said.

The Morrison government announced an overhaul of the childcare system last week to remove means-testing and directly pay up to 50 per cent of fees centres were receiving in the fortnight to March 2, up to the rate cap.

It comes in response to urgent calls for help, including from long day care providers who last week were looking down the barrel of a system-wide collapse because of the demands placed on them during the pandemic.

More: Bendigo childcare providers welcome reform during pandemic

But Mr Goble said the reforms appeared not to have taken into account specific needs of family day care providers.

Ignite Mind educators will get $5.55 an hour per child, which will not be enough to cover administrative costs, compliance and support, he said.

Half of Mr Goble's 50 educators are considering pulling the pin if childcare reforms are not modified quickly.

"It's a very difficult time for everyone and while there needs to be a financial break, the current free policy won't work," he said.

Malmsbury parent Alison Vaughan said either she or her partner would need to stop working if their children's family day care educator closed during the pandemic.

"There aren't many other options out here. That might mean we might not be able to pay our mortgage," she said.

"For a plan that's supposed to offer relief to people, there's none anywhere for the family day care model. Not for educators, not for us and not for our kids."

Federal member for Bendigo Lisa Chesters said she had been contacted by a number of family day care providers in town concerned about cuts to casual hours and enrolment hours under the reforms.

She welcomed the government's commitment to free childcare during the crisis but has written to education minister Dan Tehan with her concerns.

"What I'd like is for the minister to make sure the new (childcare) model caters for all early learning that's provided in our community. It's not a one-size-fits-all model," Ms Chesters said.

Mr Tehan said family day care services are eligible for the childhood sector relief package JobKeeper payment.

"If a service has questions about how the new system will impact their business they should contact the department and we will work with them through their payments under the Early Childhood Education and Care Relief Package and the JobKeeper package," he said.

"Exceptional circumstances funding is available."

The package was shaped with input from peak industry organisations and received detailed information about their sector's operations, Mr Tehan said.

We have removed our paywall from our stories about the coronavirus. This is a rapidly changing situation and we want to make sure our readers are as informed as possible. If you would like to support our journalists you can subscribe here.