Many parents say they can't afford to work and pay for nursery care because costs are £1,533 higher than in 2010.
The Family and Childcare Trust Survey found the cost of sending a toddler to nursery part-time has risen by around a third over the last five years, with parents forking out £6,000 a year on average.
The cost of full-time nursery care has risen to a staggering £11,000 a year.
The survey found that across Britain, it now costs around £115.45 on average to send a child aged under two to nursery for 25 hours a week - a total of £6,003 per year.
The report said: "Over the last five years, while there have been deep cuts to other public services, the coalition Government has increased spending on childcare.
"But despite this welcome investment, this year's survey finds childcare prices have continued to increase and the gaps in provision remain unfilled.
"The reality is that for too many families it simply does not pay to work."
Trust chief executive Stephen Dunmore said: "If childcare costs continue to rise at this pace, the benefits of this new financial support to parents will be quickly eroded within the next parliament.
"In spite of several positive initiatives, including more funding for free early education, the childcare system in Britain needs radical reform."
The National Day Nurseries Association said the biggest reason that nursery fees are rising is that some parents are subsidising the cost of the government's free nursery places.
It said that the money which childcare providers receive to deliver these free placements falls short by an average of £800 per child per year for each three to four-year-old place and £700 for each two-year-old place.
A Department for Education spokesman said: "We understand that the cost of childcare can be an issue for many parents, but this report only relates to the prices parents pay after they receive the Government's offer of 15 hours of free childcare.
The survey comes as Deputy Prime Minister Nick Clegg said that under Liberal Democrat plans, working parents of very young children would be offered 15 hours of free early education a week, saving families about £2,600 a year.
There would also be a universal entitlement to free childcare for all two-year-olds, potentially saving parents thousands of pounds each year, and a pledge to boost funding for poor pre-schoolers.
However, he will face criticism from thousands of stay-at-home parents amid accusations that the Government is attempting to force those who choose to look after their children back into the workplace.
Mr Clegg has already said that one million more women should be in work within five years.
Those plans have faced heavy criticism from groups including Mothers At Home Matter, who have accused the Government of ignoring the needs of women who choose to remain at home to look after their children.
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