A key finding in Local Childcare Markets - A Longitudinal Study was that "the childcare element of the working tax credit can work well in areas where living costs are relatively low".
Conversely it is least helpful in the more affluent areas where better-off parents push up the prices of childcare.
The researchers found that due to the low level of revenue funding allocated to children's centres, fees would have to be increased to ensure sustainability.
Daniela Reale, policy and campaigns manager at the Daycare Trust, said: "We welcome the conclusion that tax credits alone are not enough to bridge the affordability gap for many parents."
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