Mr Hoban said the programme was showing "promising signs" against a tougher economic backdrop than was expected when the scheme was launched in June last year, adding: "Some are hitting the standards we expected, others have some way to go. The challenge for providers is to turn more job-starts into sustainable work."
TUC general secretary Brendan Barber said: "Just 2.5% of young people moved into a long-term job and today's findings once again highlight the folly of cutting programmes like the Future Jobs Fund, which had a much better record of getting young people back into work and which was saving the taxpayer £7,000 a year."
Katja Hall, the CBI's chief policy director, said: "We should remember that today's statistics show performance for the first year of a scheme where the greatest gains will come over the long term."
John Walker, chairman of the Federation of Small Businesses, said: "It is disappointing that only 3.5% of people stayed in a job for more than six months through the Work Programme. Our own research shows that small firms and self-employment are the most important routes back into work for the long-term unemployed. However, those firms are being hit by weak demand and rising cost of doing business."
The Employment Related Services Association, the trade body for the welfare to work industry, said criticism of the scheme was unfair, predicting that an increasing number of people will be helped into a sustained job, and the programme was proving better value for money to the taxpayer than any comparable welfare to work scheme in the past 20 years.