A radical restructuring of the inspectorate, part of a government-wide efficiency drive, will involve the closure of five regional early-years centres and the loss of 500 jobs, a fifth of Ofsted's workforce.
Headquarters staff will be cut by a third and three HMI support centres will close in the reorganisation. Staff outside London will be concentrated in regional offices in Bristol, Nottingham and Manchester.
The closures are expected to take place by March 2006.
The Public and Commercial Services union said that the measures would put children at risk.
Responsibility for dealing with parental concerns about childminder registration and police checks will be transferred to a new "hub", dubbed a call-centre by the civil service union.
The changes, announced on the day of the Queen's Speech, are part of a drive to produce savings of 20 per cent in Ofsted's annual budget by 2008 and wider efforts to reduce costs across government and put more money into front-line services.
David Bell, chief inspector, pledged that no childcare inspector or school HMI jobs would be cut.
He said: "We are committed to safeguarding the front-line delivery of our inspection services in order to continue improving our focus on delivering better education and care through effective inspection and regulation."
Dean Rodgers, national officer with the PCS union, said that parents concerned about the care their children receive would no longer receive expert advice.
"This will be something akin to child protection by answering machine - parents being asked to press one for child protection, two for police records and three for medical checks.
"It is absurd to say the changes will not affect front-line services. It could put children at risk," he said.