More than 168,000 jobseekers have found lasting work through the Work Programme, but some providers have been penalised for their poor performance.
Figures released by the Department for Work and Pensions (DWP) showed that, up to the end of June 2013, 149,000 had sustained a job for at least six months, an increase of 37,000 since March.
However, less than a quarter of those who joined the scheme at the beginning in 2012 had found long-term work despite receiving two years of support.
A total of 1.31 million people have used the Programme but the number referred each month has been decreasing.
This may be related to the big jump in the number of sanctions, with more people being thrown off benefits before they reach the nine-month trigger point.
DWP has admitted some providers are under-performing and will have part of their contracts taken away.
Seetec in the east of England, Avanta in the south and A4e in the east Midlands, South Yorkshire and Merseyside will all lose 5% of their potential clients.
This is only the latest problem to befall A4e recently, with nine employees of the company charged with fraud this week and being found guilty of racial discrimination by an employment tribunal on Monday.
The company dismissed Rohim Ullah from its Bradford office in 2011 for failing to follow proper procedures, while two white managers accused of the same thing were kept on.
Better-performing companies, including Ingeus and G4S, will be given more referrals in place of these failing companies.
Mark Hoban, employment minister, said: "Work Programme providers have improved significantly, but we have always been clear that, while many are performing well, others are lagging behind. That is why, in order to drive up performance, help as many people into work as possible, and give the best value to the taxpayer, from August this year we began referring more claimants to the better-performing providers."
But with more than three-quarters not gaining sustained jobs, and 93% of disabled and long-term sick people on Employment and Support Allowance (ESA) not being supported into work for at least three months, the Programme is still missing significant targets.
Despite higher payments being made to support these clients, providers want more money to help them.
Kirsty McHugh, chief executive of the Employment Related Services Association, which represents the employment support sector, called this a "major concern".
"We believe far more needs to be done to join up health and skills budgets with the Work Programme to help those on ESA into work. Many of this group have significant needs that cannot be met by the Work Programme alone," she said.