Former lecturer David Chaytor, MP for Bury North, said it was time the Employer Training Pilot scheme went national.
His demand came as the Learning and Skills Council released figures showing huge take-up during the scheme's first eight months. Launched by Chancellor Gordon Brown last September, the pound;170 million scheme running in 12 areas has enrolled 2,000 employers and more than 10,000 workers.
Mr Chaytor told FE Focus: "The pilot scheme to reimburse small firms for the cost of sending staff on training courses up to level 2 has been very successful.
"This Government has done more for education-to-work based training than any government in the past 40 years. I want to see the Employer Training Pilot scheme go national."
The scheme was set up initially in Birmingham, Derbyshire, Essex, Tyneside, Manchester and Swindon. In November it was extended to include South Yorkshire, Kent, Leicestershire, east London, Berkshire and Shropshire.
The pilots, which will run until autumn 2004, aim to overcome barriers which prevent small firms training staff. Under the scheme, employers identify the vocational or basic skills needed to improve the business.
They are then reimbursed for the cost of releasing employees during normal working hours.
So far none of the 2,000 firms and only 70 trainees have dropped out of the scheme.
Seven in 10 of the participating firms employ fewer than 50 workers and 40 per cent had no prior contact with public-sector support agencies.
Bryan Sanderson, chairman of the Learning and Skills Council, said:
"Industry loses pound;5 billion annually through poor literacy and numeracy skills - which is something we need to tackle.
"The pilots do just this. Employers who have never previously been engaged in developing their workforce are now training low-skilled staff. We expect to have more than 3,000 employers and 15,000 employees taking part in the scheme by the end of the summer."