The funding increase offered to nurseries in England to cover extra free childcare is less than the cost of a second class stamp, say campaigners.
From September three and four-year-olds will be eligible for 30 hours' free nursery education if both parents work.
But the National Day Nurseries Association says the average extra 40p an hour offered to providers falls short of what they need.
Currently, three and four-year-olds in England are eligible for 15 hours of free nursery education per week.
This entitlement will double from September under a flagship Conservative pledge in the 2015 election.
But nursery operators say the money allocated has never covered their costs and doubling the hours will make matters worse.
Until now, they have been able to offset the shortfall by charging more to families who pay for extra hours over the 15.
This source of income will dry up once families are eligible for 30 free hours each week.
Meanwhile, higher business rates and the planned rise in the national living wage to £9 in 2020 mean higher costs.
The NDNA sent a funding questionnaire to each of England's 152 education authorities under Freedom of Information law, and received responses from 128.
On average, from September local authorities will increase funding for free nursery care for three and four-year-olds by 40p per hour to £4.37.
London boroughs will pay an average of £4.97 and councils outside London an average of £4.23.
