The Denison Street centre is one of 16 early childhood centres across the state selected for the NSW government's $20 million Flexible Initiatives Trial (FIT).

The trial aims to provide extended work hours, care, and new programs to address barriers for parents in the workforce.

Denison Street Early Learning Centre Service director and nominated supervisor, Corinne Cloake, said the centre had an extensive waiting list and the grant opened up new opportunities.

"I have pages upon pages of families looking for care," she said.

"It is just needed; we offer a good quality service and I can now offer that to more families.

"It is something we wouldn't have been able to do on our own."

Yarm Gwanga Preschool and Early Education Centre in Armidale was also a recipient.

The new Denison Street classroom will be created for 20 children between the ages of four and five and will employ an additional teacher.

Ms Cloake said the preschool would also hold smaller classes to accommodate parents.

"The childcare subsidy works on hours based on what the parents are working or studying," she said.

"So, if they are only entitled for 24-hours, they get one day a week. By offering a six hour session instead of our current session, that can go between nine, 10 or 11 hours,

"Then parents will be able to pick-up two days a fortnight in a daycare setting."

This will also make sure kids are school ready, as the NSW government requires kids to complete 15 hours a week of preschool before primary school.

"It will also give me more flexibility for families depending on what their needs are in a particular year."

This is part of the federal government's commitment to support children and young families, which includes the funding of $769 million to build 100 new preschools across the state.

Deputy Premier and Minister for Education and Early Learning, Prue Car, said this trial was supporting existing services and responded to the needs of their local communities.

"This will look different in different areas across the state," she said.

"With more flexibility and expanded offerings, which is a great outcome for parents and our youngest learners."

Ms Cloake said the next step was to submit a development application to the Tamworth Regional Council.

"The DA should be lodged within the next two and three weeks, and my builder could start in August if everything goes to plan," she said.