Deputy prime minister Nick Clegg has launched a new £126m government programme in a bid to create training and employment opportunities for at least 55,000 young people.

The initiative, which is part of the Youth Contract, is to target 16- and 17-year-olds currently not in education, employment or training (NEET) and with no GCSEs at C grade and above.

Under the programme, charities and businesses with experience of supporting young people will be invited to bid for contracts worth up to £2,200 for each individual helped.

Organisations participating in the scheme will receive initial payment for taking on a 16- or 17-year-old, before receiving further payments depending on the person's progress.

Clegg said: "Sitting at home with nothing to do when you're so young can knock the stuffing out of you for years. It is a tragedy for the young people involved - a ticking time bomb for the economy and our society as a whole.

"We all have a duty to reach out to the young people who can be hardest to reach. That's why I am calling on charities and other organisations at the coal face to work with government to help tens and thousands of lost teenagers onto a brighter path."

Suki Kalirai, interim chief executive officer of SkillsActive, the skills council for the sport and active leisure sector, has welcomed the announcement.

Kalirai said: "The sport and active leisure sector is perfect for NEETs. We offer highly attractive job roles that can help get many of the now 1 million unemployed 16- to 24-year-olds off the dole queue.

"This latest initiative offers a much needed career lifeline and helps employers to source enthusiastic, skilled talent for their workforce."

Three areas (Liverpool, Leeds-Bradford-Wakefield and Newcastle-Gateshead) will be able to allocate their own funding as part of the Government City Deal, which is giving greater autonomy to England's core cities.

Details: www.education.gov.uk