Parents will have access to three days of guaranteed subsidised childcare after Labor was pressured to bring the new laws forward ahead of the federal election.
In what might be the final parliamentary sitting day before the election, due by May 17, the Albanese government's signature policy passed the parliament on Thursday after the Greens brought on a vote.
The changes kick in from January 2026, and remove the current activity test to guarantee subsidies for families earning up to $530,000 in a bid to lay down the foundations for a universal early education system.
The coalition did not back the legislation.
Activity levels are used to determine how many hours of subsidised childcare people are entitled to each fortnight.
Early Childhood Education Minister Anne Aly told Question Time, the sector had been in desperate need of an overhaul.
"We have made significant progress in reforming the sector across those three pillars of affordability, accessibility and a sustainable workforce, towards a vision of a universal early childhood education care sector that is simple, affordable and accessible," she said.
"Because of our cheaper childcare reforms, one million families are better off to the tune of around $2700."
Catherine Liddle, the chief executive of the peak body for Aboriginal and Torres Strait Islander children, said the legislation had removed the "barrier" of the activity test.
"When our children are and our families are supported through access to wrap-around services in Aboriginal community-controlled centres, studies show we get better outcomes for those children not only in the early years, but throughout their life," she said.
The Parenthood chief executive Georgie Dent said the activity test was "completely misaligned" with reality.
"At least 126,000 children, many from low-income, First Nations or single parent families, are excluded from receiving early childhood education during their most formative years, entrenching inequality and costing the government more," she said.
Expanded subsidies, means the amount of support granted for childcare rose to up to 90 per cent of costs for families earning up to $80,000.
