A means-tested single payment, to replace the childcare rebate and benefit, would be paid directly to a chosen service provider that could include nannies.

The report also suggested diverting money from the Coalition's proposed Paid Parental Scheme into childcare coffers, to have broader community impact.

Such changes seek to improve the employment rate of Australian mothers, which at 62 per cent is below the OECD average of 66 per cent.

Lady Gowrie Child Centre chief executive Ros Cornish said low and some middle class income earners would be better off under the Early Care and Learning Subsidy proposals.

Parents who earn under $60,000 would get 90 per cent of childcare costs covered, while families earning above $160,000 would receive decreased support.

"The money is being redirected to where it is most needed and that is a good thing," Mrs Cornish said.

"I can see positives in the inclusion of nannies and grandparents to provide flexible options but we need to make sure that the quality of care is high," she said.

Mrs Cornish said their roles and responsibilities would need to be clearly set out, and stringent compliance audits and procedures in place.

She said if the suggestion to redirect money from the Paid Parental Scheme was adopted, that money might go towards supporting compliance measures.

"If nannies are in receipt of government funding they need to fall under the National Quality Framework," she said.

Northern Children's Network chief executive Steve Yates said it would examine options about how to bring nannies under its umbrella of services.

"We have a mentoring role - supporting educators whether they are in a family home or their own home providing care - and we are just wondering how that will work with nannies," he said.

@IsabelBird or email ibird@examiner.com.au