The program has been caught up in months of bickering between the state and federal governments over who should provide funding, which ran out on December 31.

The state government released an independent report on Friday, recommending the program be dissolved and its funding diverted.

The KPMG report found that the program's "social benefit exceeds social cost".

But it also cited problems with the program including trouble meeting its aim of short-term care at late notice.

The report suggested funding be shifted to the under-used Adult Community and Further Education subsidy. That program assists parents with childcare while they undertake education and training.

But Duke Street Neighbourhood House manager Bronwen Merrigan said a number of parents using the program weren't necessarily in further education.

"A lot of our low-income families aren't taking classes but aren't in a position to pay for full childcare," she said.

The Sunshine service will continue until June thanks to a $25,000 eleventh-hour grant from Brimbank Council.

The future looks gloomy beyond then, with Children and Early Childhood Development Minister Wendy Lovell saying the program was being "inappropriately used" to

address gaps in general childcare services.

Jamila Rizvi, a spokeswoman for federal Early Childhood and Childcare Minister Kate Ellis, said the state government should follow the lead of other states which have committed funding for this type of childcare.

State opposition children and young adults spokeswoman Jenny Mikakos said the report offered a flimsy excuse to refuse funding the program.