The government is to provide annual prize money worth $1 million (pound;398,000) a year as part of a drive to encourage students to take up vocational courses.

As more than 25,000 school-leavers a year miss out on a university place, the federal government has been urging schools to offer their students alternative pathways to qualifications.

The $2,000 (pound;796) awards will go to 450 students enrolled in vocational courses with another 50 awards for those doing apprenticeship courses in schools.

Almost 200,000 students in Australian secondaries take vocational courses as part of their senior studies. The students are mostly those who plan to do an apprenticeship when they leave school or go on to a technical college.

Some schools offer courses that students do as the first stage in an apprenticeship. When they leave school, they can complete the apprenticeship with an employer while undertaking further formal training at a technical college.

Education minister Brendan Nelson said 70 per cent of school-leavers did not go on to university and students needed to consider alternative career paths that were also worthwhile and well-paid.

The government has agreed to fund the development of a formal qualification to recognise pupils’ employability.

Dr Nelson said an “electronic skills portfolio” would also be set up for students to record their skills and career aspirations. They could record these on a special website to support job applications, career planning and entry into further education and training.