I would hate to imagine how people on lower salaries manage

It's like having a second mortgage," says Michelle Thornhill, a management accountant and mother of two paying for full-time nursery care for her 22-month-old son, Kieran.

Nursery fees of £170 a week - over £700 a month - take a "substantial chunk" out of the family's budget, according to Mrs Thornhill, 39, who encountered even higher fees at some nurseries near her home in south-east London.

The bills, around the average for outer London, reflect the particularly high cost of childcare in the capital, where demand far outstrips supply.

"I would hate to imagine how people on lower salaries manage," Mrs Thornhill says.

Many nurseries she researched during a long hunt for a suitable place for Kieran had waiting lists of a year or even longer. "There's such a demand, yet many are so awful," she says.

One nursery she looked at for her daughter Tia, now six, charged £110 a week yet had no outdoor space, bars on the windows and was "just appalling".

As parents scramble to find coveted places, nurseries "put their prices up every January", she says, because they know there will be a queue of young children ready to toddle through their doors.

Government support, Mrs Thornhill believes, is hopelessly inadequate.

The family - husband Douglas works for British Telecom - qualifies for £10 a week in state help via the childcare element of the working tax credit.

The state would do better to spend the money on creating more and cheaper nursery places, she argues.

"I would prefer the government to invest more money in more nurseries and make more incentives for organisations to have on-site nurseries.

This would be "a great benefit to a lot of people," she said.

"I am sure a lot of people are suffering through it - parents are doing things like delaying getting kids new shoes because they just can't afford it."