The system, whereby parents have to typically pay up to a month’s fees up front for childcare costs and then claim the money back, means that parents in England could be left out of pocket by £1,000 or more.
Save the Children is backing a legal challenge by single mum Nichola Salvato, who alleges that the system is unlawful and discriminatory.
The charity says that the policy disproportionately affects women, as more than 35,000 single mothers currently receive childcare support through universal credit, compared to 1,000 fathers.
Last week Ms Salvato was given permission by the High Court to proceed with a legal challenge against the Department for Work and Pensions over the upfront payment rule.
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