More than one in three after-school clubs are facing financial problems, according to the national charity Kids' Clubs Network.
The charity says that an extra Pounds 300,000 announced by the Government this week to boost after-school childcare will not be enough to overcome cash shortages.
Cheryl Gillan, junior education and employment minister, said that childcare was an integral part of the Government's strategy in getting parents back to work.
The childcare initiative - originally due to be wound up in 1996 - is to become part of long-term spending plans with Pounds 12.3 million funding over the next three years.
However, Kids' Clubs Network estimates there are around 800,000 latchkey children for whom there is no out of school provision. The problem is most acute in areas of low income where parents cannot contribute to the cost of running after-school clubs.
The charity maintains that rapid growth in the number of clubs in the three years to 1996, when the Government provided Pounds 45 million, has halted.
It estimates that more than 30 per cent of after-school clubs are facing financial problems which could result in closure over the next three to five years.
Kids' Clubs Network is calling on the Government to increase funding to at least Pounds 20 million a year and to set new targets for the number of places to be created by the year 2000.
Government projections show that of the estimated 1.5 million increase in the workforce by the year 2006, 74 per cent will be women. According to Mrs Gillan, an additional 70,000 childcare places have been created since the initiative was launched in 1993.