Delegates at a London conference organised by the Kids' Clubs Network attacked the decision to end the Out-of-School Child Care initiative in March 1996.
John Prescott, Labour's deputy leader, called the decision "an abject waste of public money".
Two years ago, the Government invested Pounds 45 million in out-of-school child care and there are now 1,300 clubs on school premises nationwide. The money, spread over three years, is being made available through the Grants for Education Support and Training programme, which provides pump-priming grants.
There will eventually be 3,000 clubs, although this figure falls far short of the Kids' Clubs Network target of 8,000, or one for every three primary schools.
The clubs were started because after-school and holiday child care is the single biggest barrier to women returning to work.
But John Prescott said: "It is already becoming obvious that up to half of the 17,000 new places in after-school clubs could disappear again at the end of the initiative. In many areas of the country it just isn't realistic to expect clubs to become wholly self-financing without damaging the quality of the service, or putting the future of the club itself in jeopardy.
"Switching the subsidy on when a club opens and instantly switching it off after 12 months is not the best use of taxpayers' money. That short-sighted approach has led to an abject waste of the money already invested in the initiative, with clubs that have already received thousands in start-up costs having to close after 12 months for the want of a much lower level of subsidy. Where's the sense in that?" Earlier, Employment Minister Ann Widdecombe, told the conference there was still a lot to be done for out-of-school child care. But, apart from announcing publication of a good practice guide on how Training and Enterprise Councils have tackled the job of expanding out-of-school care, she offered no concrete proposals.
Her speech was received in silence, in contrast to Mr Prescott's, which won loud applause. Questioned by delegates, Miss Widdecombe said the clubs had to be self-financing.
The Kids' Clubs Network will be pressing the Department of Employment to provide an "exit strategy" for the initiative next March. And it will warn the department that ending a badly-needed initiative just before a general election is poor policy-making.
This was a moot point for at least one delegate at the conference - which was supported by the staff benefits company, Childcare Vouchers, and the Confederation of British Industry - who suggested the original grant was merely a vote-catcher.
Anne Longfield, the director of Kids' Club Network, called for help to bridge the gap between pump-priming and long-term funding. Three years was too short to raise awareness about the clubs and encourage employers to help with funding, she said.
Paul Southworth, president of Avon Cosmetics, a company keen to help staff solve child care problems, said: "The closed doors of many fuddy-duddy boardrooms still have to be prised open."