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Early childhood interventions have the potential to reduce children's developmental inequities. We aimed to estimate the extent to which household income supplements for lower-income families in early childhood could close the gap in children's developmental outcomes and parental mental health. Data were drawn from a nationally representative birth cohort, the Longitudinal Study of Australian Children (N = 5107), which commenced in 2004 and conducted follow-ups every two years. Exposure was annual household income (0–1 year). Outcomes were children's developmental outcomes, specifically social-emotional, physical functioning, and learning (bottom 15% versus top 85%) at 4–5 years, and an intermediate outcome, parental mental health (poor versus good) at 2–3 years. We modelled hypothetical interventions that provided a fixed-income supplement to lower-income families with a child aged 0–1 year. Considering varying eligibility scenarios and amounts motivated by actual policies in the Australian context, we estimated the risk of poor outcomes for eligible families under no intervention and the hypothetical intervention using marginal structural models. The reduction in risk under intervention relative to no intervention was estimated. A single hypothetical supplement of AU$26,000 (equivalent to ∼USD$17,350) provided to lower-income families (below AU$56,137 (∼USD$37,915) per annum) in a child's first year of life demonstrated an absolute reduction of 2.7%, 1.9% and 2.6% in the risk of poor social-emotional, physical functioning and learning outcomes in children, respectively (equivalent to relative reductions of 12%, 10% and 11%, respectively). The absolute reduction in risk of poor mental health in eligible parents was 1.0%, equivalent to a relative reduction of 7%. Benefits were similar across other income thresholds used to assess eligibility (range, AU$73,329-$99,864). Household income supplements provided to lower-income families may benefit children's development and parental mental health. This intervention should be considered within a social-ecological approach by stacking complementary interventions to eliminate developmental inequities. • Income supplements provided to lower-income households may improve children's development. • Household income supplements may also be beneficial to parental mental health. • The absolute reduction in risk of poor outcomes ranged between 0.8% and 2.8%. • Household income supplements alone are insufficient to eliminate child inequities. • Stacking multiple complementary interventions over the life course is needed. [ABSTRACT FROM AUTHOR]