The report, by the House of Commons' Committee of Public Accounts, found a catalogue of errors in the implementation of the £1.5bn scheme, including overspending, unrealistically high targets and a lack of proper prevention of fraud.

The committee said it did not "expect perfection", but concluded that the scheme had "not been managed to a standard that could reasonably be expected".

Train to Gain was launched by the government in September 2006 to offer vocational training for employed individuals in the UK. Since its inception, it has assisted 1.4m learners from around 200,000 companies.

However, today's damning report identified "serious weaknesses" in the management of the project by the Learning and Skills Council (LSC), an executive non-departmental body of the Department for Business, Innovation and Skills.

The committee reported how the LSC "started badly with over ambitious targets and under-spending" before ramping up the scheme resulting in overspending and "the current unacceptable position where too much training is in the pipeline and employers with new requirements are being turned away".

Inherent in the failure was the lack of visibility the LSC had over the providers of the courses, which resulted in a "stop start" approach to allocation of positions.

The report quoted the example of one provider that was told in September 2008 to double its learner numbers in a year and then double them again, before being told in March 2009 to stop taking on new learners.

More worryingly, the committee identified "a lack of co-ordination of anti-fraud activity within Train to Gain with unclear responsibility for fraud risks".

After the Individual Learning Accounts fiasco, in which it was found that £97m was fraudulently obtained, not having sufficient fraud prevention strategies was inexcusable, it claimed.

The report goes on to say that £11m was paid to providers in error, of which only £8.2m had been recovered by January 2009.

Terry Watts, of the sector skills council Proskills, which advises and lobbies the LSC, said the failure was a "missed opportunity" and blamed it on the target-driven nature of the way it was run.

He said: "There was initially a narrow group of qualifications and providers but it was expanded to include any provider anywhere. It hit targets but missed the point."

However, Technoprint managing director Mark Snee hit out at the "outrageous" costs of the service. The report found that the unit cost of sending out a broker to talk with an employer about their needs was £810, compared with £970 for funding the training of a learner.

"It [the report] is another shocking account of waste, mismanagement and chaos generally in the UK's training and skills sector. The situation is worse than it was 10 years ago, but at hugely increased cost," he said.

"The £1.5bn spent on Train to Gain to little or no effect is part of the reason why the country is facing both a catastrophic debt crisis and an unemployment crisis amongst 16-25 year-olds.

"In 2006, the CBI described the skills training system in the UK as 'dysfunctional'. This report clearly suggests that it still is."

The report recommended that the Skills Funding Agency, which is due to take over responsibility for Train to Gain this April, should address these issues in the future running of the programme.

Dani Novick, from recruitment company Mercury Search and Selection, said: "Train to Gain has been much criticised in the print industry. The fact remains, however, that employers often don’t know what is available or how to access it. 

"There’s a real chicken and egg situation with a lack of apprentice/training vacancies but, at the same, time employers saying it is difficult to find people for apprenticeships.

"Of course, for many employers, it is a difficult time to commit to apprenticeships and training, but skilled people and new blood in the industry will be needed. Wherever possible, employers need to invest in future skills. Is training provision perfect? No, but it is certainly better than doing nothing."