The move is one of a number of recommendations made by the National Day Nurseries Association (NDNA) in its response to a Cabinet Office consultation on cutting bureaucracy within the early years sector as it prepares for the extension of the free entitlement to 30 hours a week.
The NDNA says that by bundling up tax-free childcare, childcare vouchers, tax credits and universal credit within one fund nurseries could cut administrative costs and parents would find it easier to pay for their childcare.
Claire Schofield, the NDNA's director of membership, policy and communications, said: "Childcare funding has grown incrementally with a number of initiatives coming from a number of different departments. We've had childcare vouchers through HM Revenue and Customs, the Department for Work and Pensions supporting low-income families returning to work through childcare tax credit and universal credit, and there is the early years free hours entitlement.
"We think it's time to have a stock take and pool all this funding together to get some efficiency for providers and simplicity for families."
She added that the increasing complexity of funding has been a key factor in providers having to invest more in administrative staff.
A spokeswoman for The Professional Association for Childcare and Early Years said the introduction of childcare passports could be particularly useful for childminders looking to reduce their administrative burden.
She added that a simplified funding process is important "so that parents and providers are both clear on what they are entitled to and there is a clear process for administering payments that is not burdensome to the provider, and is understandable for parents".
In its response to the government's review of how to cut red tape, the Pre-school Learning Alliance called for a streamlining of funding for providing one-to-one support for children with special educational needs and disabilities (SEND).
The alliance's chief executive Neil Leitch said the current process is "extremely lengthy" and beset with "significant delays" that mean some providers have to pay for the support themselves before being able to claim it back.
"This is something that government must address if it is to ensure that all children, including those with SEND, have adequate access to quality childcare," he added.