Some families are being denied access to free nursery education unless they agree to pay compulsory "top-up fees" for extra hours, a cross-party group of MPs suggested on Tuesday.
The practice risks excluding poorer families from nurseries, according to the Commons Public Accounts Committee (PAC).
Under the current system, three and four-year-olds are entitled to 15 hours of government-funded nursery education each week.
But in a new report, the PAC raises concerns that some families are being told they are eligible only if they pay for additional hours.
"We are concerned that some providers may be excluding families which do not pay for additional hours," the report says.
"In the department's own survey of parents, some parents stated that they could not receive the 'free' entitlement without buying additional hours. One witness suggested that compulsory top-up fees were commonplace in some nurseries and we have seen other evidence of parents being asked for further payments.
"Such practices risk excluding poorer families from nurseries."
The committee called for the Department for Education (DfE) to be proactive in understanding and tackling the issue.
The report, examining free nursery education for pre-schoolers, commended the DfE for increasing early years education - more than 800,000 three and four-year-olds now get the free hours.
But it warned that the DfE has a "limited understanding" of how the £1.9bn funding is spent, and says the government should collect and publish this information.
"While the Department and local authorities have focused on ensuring places for children are available, there has been less attention on how value for money can be secured and improved," the committee concluded.
"We are concerned that the Department has, as yet, done very little to understand the costs and outcomes in different local authorities and has not properly monitored how taxpayers' money has been spent."
The report also raised concerns that poorer families are the least likely to take advantage of free nursery education, with a 9% take-up between these families and others.
And it warns that evidence of the long-term benefits of nursery education is "questionable".
Research shows "very strong effects" of being in nursery in the early years, the report says.
"There is evidence of educational improvement at age five, but Key Stage One results at age seven have shown very little improvement since 2007."
The finding is similar to a conclusion by the National Audit Office back in February that free nursery places may not have a lasting impact on children's education.
PAC chair Margaret Hodge said: "High-quality early years education can have lasting benefits for children and results at age five have improved. But the Department needs to get to grips with why there is little improvement at the age of seven and what happens between the ages of five and seven to lessen the effect.
"It is essential that all parents know exactly what their children are entitled to, and that it should be completely free. Too many families are missing out because parents are not being given the information they need. The Department must take steps to ensure that all families receive their entitlement, and that parents are able to compare providers so that they can make informed choices about what is best for their child.
"It is unacceptable for any parent to be charged for what should be a free entitlement. It is also completely unacceptable that some parents cannot access the free education unless they agree to pay 'top-up' fees for more hours. The Department must take action to prevent this."