Charity KidsCan says demand for their school support is the biggest it has been in six years, with dozens of schools revealing its students are working to support their families.
KidsCan currently provides support to over 1000 schools in the form of breakfasts and lunches, jackets and shoes, and health essentials.
But chief executive Julie Chapman told Midday Report there were 77 schools and 137 early childhood centres on the waitlist, which the charity cannot support without further funding.
"We know that families are having to make really difficult choices about whether they pay the rent, put food on the table, or pay for those back to school essentials.
"So there will be a lot of kids out there this year that won't start on the first day, because of that shame of not being able to have the right shoes, or uniform, or stationary."
Chapman said the financial pressure many families were under meant school-aged children were having to work late hours, or look after younger siblings while their parents are at work.
"Forty seven of our schools that we contacted recently have told us that some children are actually now going out to work, to help support their families.
"Their working part-time jobs, turning up to school falling asleep, or not coming at all."
This year would be the toughest year yet for many families, and for some children, returning to school would be their first chance to get a proper meal since before the holidays, she said.
"For many children, school food is their main source of nutrition now. We know that on the first couple of days back at school, a lot of the focus that teachers have is on feeding kids who may not have been getting the right amount of food or nutrition over the holidays, due to cost of living."
As the cost of living crisis continues to bite for families in need, Chapman had a dire outlook for the year ahead.
"This is going to be the worst year I think we've seen."