The alliance is producing proposals to revive the interests of many private companies currently unimpressed with the scheme to get 250,000 long-term unemployed 18 to 24-year-olds.

The alliance was formed by the 10-year-old charity, Drive for Youth, which deals with disaffected young people including drug addicts and criminals. Other big names include the Prince’s Trust and the Duke of Edinburgh Award Scheme.

DFY development director Andree Koval said ministers had failed to understand the lack of interest in the programme: “Companies are put off partly by the bureaucracy. And they have been given no clear guidance on what will be expected of them.”

One in four of the target 18 to 24-year-olds group falls into the DFY’s category. “They will neither choose one of the four options - despite the benefits sanctions - nor be successfully selected by option providers. They are viewed as unteachable and unemployable,” she said. “You can understand industry’s reluctance to take them.”

Newscaster Martyn Lewis, a DFY trustee and author of a book of advice for young people, warned ministers: “If you do not tackle these youngsters then you might as well forget Welfare to Work.”

The Government this week changed the New Deal rules, making public-sector groups eligible for Pounds 60 a week plus Pounds 750 towards training if they take on a long-term unemployed young person.

The tacit recognition of the likely failure of private industry to provide the expected places comes at a crucial time. The Government will invite applications for partners on “pathfinder” projects next month.

It is understood that big companies, including PowerGen, Jaguar and Kwikfit will support Welfare to Work if ministers relax training guidelines and some inspection demands.

They would also want more Government support for the “unteachable and unemployable” in the early stages such as those run by DFY when options are offered to young people.