Playgroups say the national minimum wage will leave them fighting to avoid closure.
More than half of England's 18,000 pre-schools pay their assistants less than Pounds 3.60 an hour - the national minimum for people over 21, due to come into force from April 1999.
The Pre-school Learning Alliance, the charity which supports pre-schools for three and four-year-olds says many parents struggle to pay the fees now and would not be able to afford an increase, although the group backs the minimum wage in principle.
Margaret Lochrie, the alliance's chief executive, said: "Most pre-schools say we will have to increase the fees but this would mean some parents would have to drop out. Pre-schools have been chronically under-funded - that is why the wages are low."
Pre-schools facing closure can apply for a grant from a special Pounds 500,000 Government fund set up in May, but this money will soon run out, says the PLA.
A total of 900 pre-schools have closed so far this year - in addition to the 800 lost last year.
Annual closures were running at about 100-150 before the Conservative government's nursery voucher scheme encouraged primary schools to take four-year-olds into reception classes.
Caroline Carter, supervisor at the 18-strong Hazel Tots pre-school on the Bellfields council estate in Guildford, Surrey, pays her assistants Pounds 3.33 an hour.
She said: "We cannot increase the fees because some of the parents are on benefits, some are one-parent and some are on low wages. They struggle already.
"I have lost two children because the parents could not afford to pay. We increase the fees every year by 25p per hour and they really struggle."
But the Low Pay Unit, an independent charity which was set up in 1975, believes the national minimum wage should be Pounds 4.61 an hour - half of median male earnings in the country.
Bharti Patel, the unit's director, said organisations such as the alliance needed to do their homework, and calculate the numbers of children, the cost of childcare, and the indirect benefits brought to pre-schools by parents' increased incomes through the national minimum wage.