The federal government believes there's wide-scale rorting going on in the family day care sector, as a report in The Australian alleges taxpayers have lost more than $1 billion in the past two years through systemic rorting.

Family day care is more difficult to regulate than centre-based care, because children are minded in private homes.

The Victorian Minister for Families and Children, Jenny Mikakos, wants an independent review and to prohibit new family day care providers from starting up in areas that are already saturated with providers.