The JobBridge internship scheme will be closed to new applications from Friday, Minister for Social Protection Leo Varadkar has announced.
Mr Varadkar said the "far from perfect" initiative has served its purpose and will be wound down to be replaced by a new programme.
"Those currently on the programme will be able to complete their internship," Mr Varadkar said.
A consultation process has been launched for key stakeholders to design a new, more targeted work experience programme, he added.
Mr Varadkar said it "will focus on the medium to long-term unemployed, have a stronger focus on skills and training, and should provide at least the minimum wage."
The controversial JobBridge scheme was launched in 2011 and provided work experience opportunities for unemployed people. Participants were offered an internship of up to nine months - which saw them keep their social welfare payment and get an extra €52 per week.
Leo Varadkar says a 'more targeted' work experience programme will replace JobBridge, which is being wound down. https://t.co/mfflrPvVj9 pic.twitter.com/4qUrEAPVJR— RTÉ News (@rtenews) October 18, 2016
Minister Varadkar was speaking at the publication of an external review of the Jobsbridge programme this afternoon.
The review carried out by Indecon found that there was broad agreement that the internship provided new job skills and an opportunity to gain quality work experience.
Varadkar: "The Indecon report shows that JobBridge has helped around two thirds of participants, some 38,000 unemployed people from all age groups, to re-enter the jobs market. Although it was far from perfect, looked at in the round, it was a real success."
But Indecon found that there was dissatisfaction with the value of the top up.
It recommended that a new programme should give consideration to limiting the maximum duration of work experience to six months and should place greater emphasis on development of the interns.
"It has been clear for some time that the scheme wasn't working the way it was intended to, and that some unforeseen, negative consequences happened," Fianna Fáil’s Social Protection spokesperson Willie O’Dea said.
"Evidence reported to the Government over the past five years has consistently shown that JobBridge was causing an exploitation of certain interns, and that in certain circumstances, interns were not getting the best possible training in their pursuit of paid employment."
He stressed "the new scheme must learn from the mistakes of the past."
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Anti-Austerity Alliance TD Paul Murphy said the recommendation that participants in any future scheme should receive at least the minimum wage "vindicated those who opposed JobBridge as a source of free labour."
Business lobby group Ibec welcomed the commitment to replace the scheme but warned about any delay in setting up a replacement.
Mr Varadkar said in May that the scheme would be replaced with a more targeted scheme in September.