From Friday, the $10,655 Child Care Subsidy cap will be scrapped in a bid to reduce costs and assist more families return to full-time work.

It is estimated 18,000 families will benefit from the immediate drop in the cap which will be retrospective for any payments during the current financial year.

Minister for women's economic security Jane Hume said the decision is primarily to assist women and to remove any financial disincentives from returning to work.

'"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.

According to figures from the Australian Bureau of Statistics, more than 85 per cent of women wanting to return to work were not looking as a result of caring for children. In contrast only 15 per cent of male correspondents said caring for child was preventing them from finding work.

In March, the federal government is planning on increasing the Child Care Subsidy by 30 per cent for two children.

Senator Hume noted families with multiple children in child care can find themselves financially worse off despite working additional days or hours, with both changes expected to save a family on an income of $110,000 a year around $100 per week.

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The changes would also mean a single parent on a salary of $80,000 would pay around $5 a day for the second child.

"With the implementation of these measures, we will be investing a record $11 billion next financial year through the child care system to keep out-of-pocket costs low for Australian families," Senator Hume said.

Families which had already reached the $10,655 subsidy cap will have any additional out of pocket expenses reimbursed for the current financial year.

Senator Hume also noted female participation in the economy is crucial to the recovery beyond the pandemic.