A cabinet committee of the work and pensions department has warned the government that ending the Future Jobs Fund could bring drastic consequences for youths leaving thousands in long term unemployment.
A report was issued to the government with 23 recommendations after news of the plan to end the scheme early was released.
The £1bn fund will close in March, with the replacement Work Programme not due in place until June.
The committee has suggested that there are not enough transitional arrangements being arranged.
The previous Labour Government created the Future Jobs Fund in response to the rising youth unemployment at the time of the credit crunch.
It was used to fund temporary employment for 18-24 year old who had been out of work for more than six months.
The committee of MPs also called for more money to fund apprenticeships as the news of less university places and the number of further education students looking to progress to higher education declines.
The Committee’s chairman, Anne Begg said: “Young people, especially those who may be lacking skills, experience and confidence, need appropriate and sometimes intensive support to find work, otherwise they risk falling into long-term unemployment.
“Providing this support is even more important during these difficult economic times.”
A spokesman for the Department for Work and Pensions has suggested that there will be transitional support available between the two funding periods.
“Unemployed young people will get high-quality support through the Work Programme which will be available nationwide by next summer.
“We are also working with providers to extend referrals to existing provision to ensure that customers referred to these programmes in March will be supported until the summer, when the Work Programme will be rolled out.”
According to the Office for National Statistics, the latest figures on unemployment in the UK show it increased by 35,000 in the three months to October to 2.5m.