The Prime Minister, Tony Abbott, will cut costs on his signature paid parental leave scheme to boost funding to childcare.

In a major backdown, Mr Abbott said that he would restructure the scheme he has taken to two federal elections, so there is more money to "invest" in childcare.

Change of plans: Tony Abbott will further "refine" the existing $5.5 billion scheme. Credit:Andrew Meares

It comes after widespread and long-term criticism of the policy, with those in his own party arguing his $5.5 billion scheme is too expensive, and parents and childcare experts calling for funds to be diverted to early childhood education and care.

On Sunday, Mr Abbott said he would spend the summer holidays working out the exact details of his revamped policy, but in a sign that his generous paid parental scheme offer would be means tested, said the new plan would be "better targeted".