The Government defines sustained employment as a job which lasts for more than 13 weeks. But 25 per cent of young people had made "false starts" as their jobs had ended sooner.
MPs on the education and employment committee said they were concerned about the "relatively high level of moves into unsustained jobs" and this was an issue they would be looking into.
The MPs were also very disappointed that, almost two years on, the public sector had not proved more willing to offer job opportunities to New Deal participants. The performance of the public sector in providing subsidised jobs had been poor, they said.
The performance of government departments had also been poor, "in some cases strikingly so". Only the Department for Education and Employment is excepted. Of the 675 participants employed in the civil service 63 per cent got jobs at the DFEE.
By the end of April this year 215,000 New Dealers had found work, and 162,000 young people had obtained jobs which lasted for more than 13 weeks. Of these, 139,000 were sustained, unsubsidisd jobs.
Less than 20 per cent of participants on the full-time education and training option appear to leave the New Deal with the qualification for which they aimed, say the MPs. Training and course providers point to high drop-out rates, which they blamed on personal advisers failing to assess clients properly and referring them to inappropriate jobs.
The MPs demanded improved job advice and help for the most disadvantaged participants, and those from non-white ethnic-minority groups.
A national survey had found that people such as ex-offenders, the unqualified, and drugalcohol users were least likely to say that the New Deal had increased their employability.
With up to 40 per cent of New Dealers being functionally illiterate, 1,000 personal advisers are to be trained by the Basic Skills Agency to identify skills gaps and to handle this issue with sensitivity.
The MPs welcomed the commitment of Tessa Jowell, minister for employment, for trying to ensuring that nobody left New Deal illiterate or innumerate.
New Deal for Young People: Two years On, Education and Employment Committee, available priced pound;7, from the Stationery Office, on 0870 600 5522