The number of trainees successfully completing apprenticeships has more than doubled over the past four years, latest figures from the Learning and Skills Council show.
But companies providing the schemes say success has come at a cost, as less able students were being excluded because of a lack of cash and unrealistic targets.
Just over 260,000 people signed up for apprenticeships this year. Employers across the country report record completion rates of almost 50 per cent - up from 24 per cent in 2001.
The apprenticeship budget rose by pound;68 million to pound;1 billion this year. But the LSC withholds 25 per cent as an incentive, to be paid only when young people complete the programme.
The Association of Learning Providers insists the measures are counterproductive. Graham Hoyle, ALP chief executive, said the success rates showed that providers really had become organised in the past two years. "But the consequence of the LSC switch to improving completion rates means there is not enough money to go around," he said.
"Two issues concern us. First, there is likely to be a reduction in the volume of new starters. Second, unless there is adequate alternative provision, the less able will be left out."
Mr Hoyle predicts companies will struggle to hit the government target of 300,000 by 2008, or the goal of 65 per cent successful completions called for by the Apprenticeship task force.
However, the LSC is confident it will hit the targets. Stephen Gardner, the council's director of work-based learning, said: "We were aiming at 64,000 this year and we have already reached 53,000. In 2007-08, we will need 75,500 apprentices and I'm sure we will do it."
Mr Gardner also defended the funding measures imposed by the council and denied this cut off training to the least able. "It is pointless starting people on programmes where they cannot achieve. We created Entry to Employment and Programme-led Pathways for those interested in an apprenticeship, but who have not yet reached the level they need to start one."
He accepted that a significant weakness is the lack of information on the non-achievers. "We have to track where apprentices go when they leave the course or the employer," he said. Latest LSC figures also show that 6 per cent who failed to complete the course for the technical certificate and key skills qualifications still achieved a full NVQ.