The Commons public accounts committee says learndirect still needs to be more efficient, despite having made some progress in cutting costs. It spends a third of its budget on marketing and administration.
But UFI, formerly known as the University for Industry, which runs learndirect, says it will slash pound;10 million a year from costs by measures which will include scrapping its 26 "hubs", which distribute funding to training organisations including colleges.
Clients take courses using computers with software and online support provided by learndirect, backed up in many cases by classroom work.
Edward Leigh MP, chairman of the committee, said: "UFI should accelerate moves to cut these costs and channel the money towards learners."
Sarah Jones, UFI's chief executive, said: "Our focus is on continuing to develop learndirect as an asset for the nation, demonstrating value for money for government, for employers and for individuals, and making an innovative contribution to skills development in the UK."
UFI says it will carry out closer scrutiny of how its money is being spent by examining the training being carried out by its network of providers around the country.
The report said the benefits of learndirect were being lost on the majority of firms.
It said just 4 per cent of small and medium-sized businesses used the service, which provides courses online. Only 37 per cent of firms were aware that learndirect is intended to support them with staff training.
The report says: "UFI's rationale is to boost employability and productivity, but it has done limited work directly with employers."
The MPs also said there was too little hard data about the number of learndirect customers completing their courses.
Despite its concerns, the committee suggested learndirect should expand into other areas of working, including training for offenders.