A survey of parents in the borough found the average cost of a nursery place was beyond the reach of many middle- and lower-income families and significant numbers were not claiming the Working Tax Credit because the childcare element was too low.
Parents were suffering stress and depression because they could not get out to work, study or socialise, the report said.
It called for changes to Working Tax Credits, more advice and support for parents on childcare and employment, and more funding for councils to pay for quality childcare.
Camden Council's executive member for education, Nick Smith, said: "The Government has put childcare at the centre of its agenda but it needs to put in more resources and have a clearer strategy."
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