The Dáil has backed a motion to stop referrals to the JobPath scheme.
The 'job activation' scheme is aimed at helping find long-term unemployed jobseekers find work.
It sees people who have been unemployed for more than 12 months referred to one of two private companies - Seetec or Turas Nua.
The companies are paid by the State if the jobseeker involved manages to get a job, with the companies now having received €149 million between them.
The Government has faced criticism for bringing private companies on board to do the work, while the Dáil's also heard claims that some people have been forced into unsuitable or low-paid jobs through the schemes.
According to Sinn Féin's private members' motion, 9% (17,100 people) referred to the scheme had secured employment which had been sustained for at least one year - amounting to a cost to the State of €3,718 per person.
In the Dáil today, the Government was defeated by 81 votes to 42 as opposition parties including Fianna Fáil called for an end to referrals to JobPath.
So the Government have just been defeated on the @sinnfeinireland motion on the discredited #jobpath scheme. They must now act on the will of the Dáil and stop referrals to #turasnua & #seetec immediately & invest in job activation schemes that work. pic.twitter.com/xznb8kPHZv
— John Brady TD (@johnbradysf) February 7, 2019
The motion was put forward by Sinn Féin's John Brady, who claimed the scheme has caused "untold damage" to existing community-based schemes.
Deputy Brady said: “Today the majority of the Dáil voted in support of the Sinn Féin motion to immediately stop referrals to Jobpath and to invest in schemes that work - schemes such as Community Employment, JobClubs and Local Employment Services.
"I am calling on Minister [Regina] Doherty and her Government to act upon this motion immediately and scrap the Jobpath scheme and invest in job activation schemes that have proven to work."
