CANBERRA, AAP – Childcare costs are set to become more affordable for families, with a limit on fee relief set to be removed.

The federal government will from Friday remove the childcare subsidy cap of $10,655.

The removal of the annual cap will be applied retrospectively for the 2021/22 financial year.

Families who reached the cap before the changes come into effect will have out-of-pocket costs for the financial year reimbursed.

Women’s Economic Security Minister Jane Hume said the change would allow for parents from more than 18,000 families to return to work or pick up more hours.

“The Morrison government supports choice for Australian families and is committed to increasing the economic opportunities for Australian women to participate in the workforce,” she said.

It also comes as the current subsidy will increase from March next year for families with two or more children.

From March 7, the subsidy will increase for families with multiple children by 30 per cent.

It’s expected about 250,000 families will benefit from the changes when they are introduced

Treasury estimates have shown both measures would mean about 40,000 parents would be able to work an extra day per week.

As a result, the department said the economy would be boosted by $1.5 billion.