A federal Labor Government would spend $4 billion over four years to make childcare free for most low-income households, and cheaper for families that earn up to $174,000.

Key points: Changes in 2018 to subsidies by the Coalition left an estimated 1 million families better off

Changes in 2018 to subsidies by the Coalition left an estimated 1 million families better off Bill Shorten promises no family making up to $174,000 will pay more under his government

Bill Shorten promises no family making up to $174,000 will pay more under his government Mr Shorten says the changes would make childcare free for around 370,000 families

Labor leader Bill Shorten said increasing the current subsidy from 85 per cent of the hourly fee cap to 100 per cent would make childcare free for about 370,000 families, saving them on average $1,400 a year.

But that depends on childcare centres not increasing hourly fees once the subsidy has been boosted, and Labor would ask the consumer watchdog to crack down on excessive increases.

At the moment, there is a cap on how much the government will pay towards childcare ($11.77 per hour for long day care), so if a centre is charging more per hour than what the government thinks is reasonable, then parents will have to pay the extra cost.

"Labor will increase the subsidy families receive, we will kickstart the process to limit out-of-control childcare price increases, and we will review the impact of the system on vulnerable and very low-income families," Mr Shorten said in a statement.

In mid-2018, the Coalition introduced the biggest change to means-tested subsidies in years, leaving an estimated 1 million families better off, and about 280,000 worse off.

Labor's announcement goes beyond those changes and Mr Shorten guaranteed that no family with an income above $174,000 would pay more under a government he leads.

For households earning between $70,000 and $100,000, the subsidy would increase to somewhere between 85 to 100 per cent of the hourly fee cap.

For those with an income between $100,000 and $175,000 it would be between 60 and 85 per cent.

To be eligible for the subsidy, households will still need to meet an activity test.

That means parents must be either: working (including maternity leave), looking for work, volunteering, doing unpaid work in a family business, studying, training or self-employed.

Federal Labor has already announced a billion dollar plan to give every three-year-old access to 15 hours of subsidised preschool.