Funding to support a reduction in the cost of childcare has been announced in Budget 2023.

The scheme - which will cost €121 million - will fund a reduction of up to 25% in the weekly fee for those availing of the National Childcare Scheme.

"This measure will put up to €175 a month, or €2,106 a year, back in the pockets of parents next year," Minister for Public Expenditure Michael McGrath told the Dáil.

A further allocation of €59 million will go to the recently established Core Funding model which will provide for extra hours and enhanced capacity in the sector.

The Minister said the childcare budget would reach €1 billion next year - five years ahead of target.

"Under the new Employment Regulation Order, those working in the childcare sector will see improved pay and conditions to better reflect the importance of the work they undertake in providing quality care for our children," the Minister said.

Fórsa, the country's largest public service trade union, said the budget measures announced today in relation to childcare costs should have been more radical.

The union said that the current high costs demand a permanent solution to be truly transformative, such as a fully publicly funded universal system.

The union's general secretary and president of the Irish Congress of Trade Unions (ICTU) Kevin Callinan said measures to reduce childcare costs by 25% will help many families but that some will still be left with near impossible choices about whether or not they can afford to return to work.

"While the broader package of cost-of-living measures is welcome, reflecting the efforts of unions to impress upon the Government the need for such measures, childcare needs more than a temporary crisis intervention," Mr Callinan said.

"Failure to tackle childcare comprehensively means a significant block remains to many parents, usually mothers, hoping to enter the workforce or to return to work after having children," he said.