The Education and Employment Committee said the first results of the programme for 18- to 24-year-olds were "very encouraging", but warned that not enough attention had been paid to what happened to them afterwards.
"Retention rates will have to be high if the New Deal is to avoid becoming the `revolving door' which is familiar to participants on so many previous schemes ... We are disturbed by the apparent lack of attention and guidance from the Employment Service on retention strategies," the committee said.
"Careful matching of participants to jobs, accompanied by development of the employee to fulfil the requirements of the job, will help to safeguard the long-term position of New Deal employees."
The committee looked at the scheme in 12 pilot areas, though it has been running on a national basis since April.
The report also highlighted fears about the prospects for young black people at the end of their subsidy period, and refers to warnings that they could end up rotating between low-skilled jobs.
The Government should survey the level of unregistered unemployment among young people, particularly black people, the report said.
Young people showed enthusiasm for the scheme, as did Employment Service staff. Personal advisers who offered support to each young person on the scheme had also been widely praised.
The scheme had helped the Employment Service to make links with large numbers of new employers.
The latest government figures show that so far 92,500 unemployed young people have started on the New Deal.Reuse content