Childcare providers and local councils have been asked by the government to step up to become the first in the country to offer 30 hours of free childcare a week.
Nurseries have been urged to come forward with ideas on how to implement raising the amount of free childcare for three and four-year-olds from next September.
But nurseries have warned that the Conservative's pre-election pledge to double free childcare from the current level of 15 hours will cost childcare providers and are unworkable.
Nursery director Nichola Moss told ITV News that she already loses £600 offering 15-hour places.
"If that increases to a 30-hour place, potential losses will be £1,200 per child," she said.
She also said that government funding doesn't cover the whole year that childcare services operate.
The Pre-School Learning Alliance says the average hourly childcare cost is £4.53 and the government currently contribute an average of £3.88 of that.
It warns the shortfall could be as much as £250 million a year meaning nurseries would make an annual loss of £661 per child.
But Education Secretary Nicky Morgan says that a review of child care spending will take place.