It has proved itself to be a bad deal for both young people and the taxpayer

James Clappison Shadow Minister for Work

But estimates suggested that in the first two years of the scheme, no more than 20,000 - and possibly as few as 8,000 - who would not otherwise have found work had been placed in sustained jobs.

Commons Public Accounts Committee chairman Edward Leigh said the figures raised questions about the programme's cost-effectiveness in raising employment levels.

"The New Deal's actual achievements in increasing employment have been at a net cost to the taxpayer of some �140m a year, which amounts to paying at least �5,000 each year for each additional person in employment."

'Over-hyped'

The audit office said the scheme had had a "beneficial effect" on the economy, increasing national income by more than �200m a year.

But its head Sir John Bourn said the programme could run into problems if the economy changed and became more challenging.

"The programme must continue to evolve to meet the needs of the increasing proportion of clients with severe or multiple barriers to employment and the changing economic climate," he said.

James Clappison, Shadow Minister for Work, claimed the scheme had been "massively over-hyped" by the government.

"It is more expensive than the government claims and inefficient at getting young people into work," he said.

High profile

"It has proved itself to be a bad deal for both young people and the taxpayer and has become a major embarrassment."

Minister for Work Nick Brown said the government was constantly looking to build on the success of the New Deal, adding: "We are determined to provide even more help to people who face the greatest barriers to finding work."

Under the New Deal for Youth programme, all people under 25 who have been unemployed for six months or more are required to choose training, job placement, or work in the voluntary or environmental sector rather than remain on the dole.

The scheme was one of the most high-profile programmes of Labour's first term in office, but has been frequently criticised by the opposition parties as an "expensive flop".