Only 480 people on the dole in Devon and Cornwall gained employment lasting at least six months out of 15,260 clients on the Work Programme since it was launched last year.
The figure equates to just 3% of the programme's participants in the two counties – lower than the national average of 3.5%.
Ministers were accused of making unemployment worse as 5% of people would secure sustainable work in any case, leading to claims that more would have found a job if the coalition did nothing at all. The Government missed its target for 5.5% on the scheme to finding jobs.
Nick Harvey, Liberal Democrat MP for North Devon and a long-standing critic of the Government's flagship scheme to get people off welfare, called for a major overhaul to save the programme from "collapse".
Employment Minister Mark Hoban defended the scheme, claiming the programme was showing "promising signs" against a tougher economic backdrop than was expected when the scheme was launched in June last year. The scheme is only in the first phase, the minister said.
He added improvement notices had been sent to private sector firms and charities involved in the programme, asking them to come up with plans to improve their performance.
But Shadow Work and Pensions Secretary Liam Byrne said the scheme is "comprehensively failing". "We were promised a welfare revolution and what we've got has been exposed as worse than doing nothing," he said.
Mr Hoban responded: "It's clearly ridiculous to suggest the Work Programme isn't helping people into work. Already nearly 10% of the first starters on the Work Programme have got into work and stayed there for six months.
"The figures also show that 40% of the 31,000 outcomes published today came in June and July – the last two months for which data is available – clearly showing that performance is already improving."
Welfare-to-work organisations, who provide training such as improving CVs, are only paid by the Government if they secure employment for an individual for at least six months.
The "payment by results" model is to prevent people being placed in unsuitable jobs which they leave soon after.
Two firms – Prospect Services and Working Links – are the major providers in Devon and Cornwall, supported by a raft of smaller sub-contractors.
They can earn between £3,700 and £13,700 per person put in a job, with an initial payment of between £400 and £600.
Figures published by the Department for Work and Pensions showed that 800,000 people had started the Work Programme since it was launched last year, but only 31,000 stayed in a job for six months.
The rate varied across the region. In Cornwall, 4,380 people started the programme, but just 120 found a sustainable job, or 2.7%. In the South Hams in Devon, 380 people out-of-work were attached to the scheme and 20 found a job for over six months, or a rate of 5.3%.
The worst performance in the region was in North Devon. Just ten people found work in the district out of 570 participants, or less than 2%.
Officials were anxious to point out that yesterday's figures represented a "snapshot" during a two-year programme, which remained on track and was not being reckless with taxpayers' money.
They also said many more people had found work but had yet to build-up six months in employment, which would trigger the payments to providers.
North Devon's MP Mr Harvey said: "The programme is targeted at the most difficult to help and missing the target also probably reflects the economy not being as rosy as ministers expected at this time. If the Government is to continue with it, I think they need to restructure the whole thing or it will risk collapsing."
But Sarah Newton, Conservative MP for Truro and Falmouth, defended the programme, and pointed out that there are other schemes tackling long-term joblessness. She said: "I want to see people getting the most appropriate help, making sure that there is no stone unturned.
"The Work Programme is just one part of it – there are other programmes to help people set up their own business and in Cornwall we have European Union funding to tackle unemployment."
Margaret Hodge, who chairs the Public Accounts Committee, issued a scathing attack, saying: "Today's performance figures clearly demonstrate that the Government's flagship scheme for getting people back into work is falling woefully short of expectations."
