The Australian National Audit Office has released its report on improving access to childcare.
The report said the Department of Education, Employment and Workplace Relations (DEEWR) had not evaluated the effectiveness of the community support program's design.
Under the program the federal government provided $104 million to establish and operate 1700 formal childcare services in areas where there was a shortage.
The report said 71 per cent of the money had been channelled into family day care, in people's homes, which was used by only 10 per cent of all children in care.
In contrast 21 per cent of money went to day care centres and outside of school hours car, which accounted for 90 per cent of demand.
"These points suggest a need for DEEWR to asses whether the program's settings remain appropriate for achieving the greatest gains," the report said.
The report recommended the federal government analyse the child care market and review the appropriateness of current eligibility and payment rates.
It warned one of the key risks is the possibility the program's budget could be exceeded.
In June 2011, the Australian Bureau of Statistics estimated there was a shortage of 148,600 childcare places.
Minister for Childcare Kate Ellis said the federal government has already started implementing the report's recommendations.
"We are committed to continuing funding to family day care services through this program," she said.
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