A front-page article in The Times newspaper claimed that from next April, nurseries would be given up to 10,000 a year for every graduate they recruit to reimburse part of the cost of their salary.
However, a DfES spokesman said that he could not 'confirm or deny' whether such a subsidy would be included in the Transformation Fund.
Details of local authority allocations of the fund and guidance on how the money should be spent are due early this year.
The Government's response to the Children's Workforce Strategy Consultation is also expected within the next month.
In its front-page lead story on 30 December, The Times quoted an unnamed source from the DfES as saying, 'We are very keen to keep the mixed supply of nursery care, with providers from the independent, private and voluntary sectors, but we want more graduates to be in leadership roles. A direct subsidy for their salary is the most effective way to encourage the recruitment of more graduates.'
Commenting on the press report, Steve Alexander, chief executive of the Pre-School Learning Alliance, said, 'Is it likely that the Government will provide a subsidy to retain graduates in the private and voluntary sector? Yes.'
He said that there was a suggestion in the Children's Workforce Strategy Consultation that incentives would be given to the private and voluntary early years sectors to encourage the recruitment of highly qualified staff.
'It's clear in the consultation that the Government makes the correlation between teacher-led services and higher quality. We say it's not just about having a teacher there.'
However, he said he expected that a subsidy for graduate recruitment 'would be only a partial element' of the Transformation Fund, with money directed towards investment for training the workforce as a whole.
Mr Alexander added, 'In principle I fully accept that Government has a role to provide further subsidy. Parents can't pay any more.'
If such a subsidy is introduced, he said, it would mark for the first time the Government's acceptance that it has a part in market forces and that the early years is not a free market.
'Until now, the Government line has been that wages in the non-maintained childcare sector have been a matter strictly between employer and employee.'
Such a subsidy would set 'a welcome precedent for future investment in the early years and childcare workforce,' he added.
'Having said this, it is vital that this subsidy is invested wisely. High quality outcomes have been shown to be linked to levels of staff qualifications, but we would question the effectiveness of parachuting in graduates, rather than working to raise the qualification levels of all childcare workers. What is needed is full workforce reform, creating a new profession with a clear career structure, the opportunity for progression taking into account several routes to qualification, and importantly, fair pay for all.'
Purnima Tanuku, chief executive of the National Day Nurseries Association, said, 'The DfES has not yet officially announced how the Transformation Fund will be spent, but we do welcome the additional investment and hope that we will see further support for the early years workforce at every level.'
However, she added that she was 'disappointed with irresponsible media articles' that were not 'factually correct in many places'.
Ms Tanuku said, 'Headlines such as "Taxpayer to bail out private nurseries"
will once again unnecessarily worry parents about childcare.'