Ministers have been urged to review rates paid to childcare providers after data revealed the number has fallen by more than 10,000 in five years.
There has been a 15 per cent drop in the number of childcare providers since 2018, with the total falling by 10,300.
Some areas of childcare provision have seen a rise in number, including providers based in schools.
But there are currently 11,200 fewer childminders operating today than there were five years ago, Department for Education (DfE) figures show. Some 3,000 have left the sector in the past 12 months alone.
The DfE argued that the population of 0-5 year olds has declined by 1 per cent each year since 2018.
But the Liberal Democrats warned the figures show “a huge crisis looming in the sector” and accused the Government of underfunding the early years sector.
Last month, the Government announced an extra £100m to fund new nursery places amid concerns over dwindling availability across the country.
The sector has warned the workforce crisis in the childcare – particularly among childminders – will make it hard for the Government to deliver on its promised to rollout better availability to parents.
The DfE said the funding would ensure childcare settings “have enough physical space” and came on top of the £289m wraparound childcare fund announced in July, which ministers said would “make sure families of primary school children can access childcare between 8am and 6pm”.
Munira Wilson, the Lib Dem education spokesperson, said ministers should review the rates paid to providers to ensure they cover the full cost of delivering childcare.
“How does this Conservative Government expect to roll out expansion of childcare when there are not enough providers to go around?” Ms Wilson said.
“The amount this Government pays for childcare services is a fraction of what’s needed compared to the actual cost of the services they are providing.
“3,000 childminders have left the sector in the past 12 months and more will follow.
“These figures show there is a huge crisis looming with both nurseries and local councils warning of a collapse if the Government doesn’t come forward now with proper funding.”
A DfE spokesperson said: “We are making the single biggest investment in childcare in England’s history and are confident in the strength of our childcare market to deliver 30 free hours of childcare for eligible working parents from nine months old up to when they start school.
“There have been year-on-year increases in early years staff and places. To make sure there continue to be enough places across the country, we are investing hundreds of millions of pounds to increase hourly funding rates and are providing £100m in capital funding for more early years places and spaces.
“We are also launching a new national recruitment campaign in the new year and are looking to introduce a new accelerated apprenticeship route into the sector to help recruit new staff.”