Nursery leaders are warning that the 30 hours free childcare places are in short supply due to 'inadequate' funding in Sheffield.
Some nurseries are planning to charge for services that were previously free to cover the costs of the Government scheme which sees the 15 hours a week free childcare increased to 30 hours from September.
The Sheffield National Day Nurseries Association said the places are 'extremely limited' because Sheffield Council is contributing £4.07 per hour to nurseries.
Under the scheme, local authorities should deliver a minimum of 90 per cent of the £4.30 an hour they get from the Government to nurseries but providers says this does not match the cost.
Association chairman Karen Simpkin, who owns Sunflower Children's Centre, in Charnock, is advising parents to apply for the places as early as possible to avoid missing out.
Families must apply before the deadline of August 31 to access the additional hours for the September term.
She said: "There is an extremely limited number of places with solely free early learning funding.
“Calling these places ‘free’ is misleading because they are still paid for, but the authority is offering just £4.07 an hour per place. That is even below the national living wage.
"At Sunflower Children’s Centre, we need five children on FEL just to pay for a single qualified staff member, and that’s before we turn a light on, get the arts and crafts out or even flush the loo.
“We need one qualified staff member for every eight children so that puts a very fine margin on offering these places.
“Providers are having to severely limit the number of FEL only places on offer just to ensure they’re not making a loss. This is an unfair burden on both parents and providers.
“We’re really trying to offer high quality care for our children and support parents who want to go back to work but with the level of funding available we can barely cover our costs.”
A survey earlier this year by the Pre-school Learning Alliance found that half of nurseries were planning to charge for services that were previously free to cover costs of the places.
One Sheffield mother, who has already received her September invoice, said she is being charged extra for meals and activities like music and phonics.
A Sheffield Council spokesman said: “Funding for free early learning comes from central government, the council can only pass on the money it receives from central government to providers which it does.
"After a recent survey of our day care nurseries, school nurseries and childminders we are confident that the vast majority are offering 30 free hours childcare to parents.
"Nurseries can operate on a ratio of eight children per member of staff and receive £4.07 an hour for each of those children.”
Robert Goodwill, Government minister for Children and Families, said: "Parents are already able to access 15 hours of free childcare but from September we are doubling that offer to 30 hours for working parents – saving them around £5,000 per child.
“That 30 hour offer is already being delivered in several areas across the country, with over 15,000 children benefitting from a place.
"We know from our evaluation that providers are committed to offering 30 hours and the additional hours are having a really positive impact on families, taking huge pressures off families’ finances.
"This is all backed up by our record investment of £6 billion investment per year by 2020.”