Businesses can bid for a slice of a £250 million Government pot to boost workers' skills, David Cameron said.

The Prime Minister hopes the cash for better vocational training will help spark economic growth and cut the number of jobless 16 to 24-year-olds, which broke through the one million barrier for the first time.

The money will be diverted from colleges and other training providers and given directly to firms whose bosses successfully apply for grants by showing how their staff and potential employees will benefit.

Mr Cameron said: "I know times are tough, especially for young people who are trying to get their foot in the door and launch their career. That is why I am determined to do all we can to give people the very best skills, training and opportunities to succeed, and why despite tough spending decisions we are investing in record numbers of apprenticeships.

"We are seeing an incredible take up of these apprenticeship places. I want that to continue, which is why we are taking action to make it easier to take on apprentices, and now we are giving employers the power to take control of the training so that it best meets the skills they need.

"I hope this radical new approach will encourage even more employers to take on apprentices and ensure the UK workforce has the skills we need to boost growth."

A total of £50 million will be available for the first year of the scheme, with another £200 million in the second. Businesses of all sizes and from all sectors can apply for cash from the New Year.

Business Secretary Vince Cable said: "We have to fundamentally alter the relationship between employers and the state - giving employers the space and opportunity for greater ownership of the vocational skills agenda, including the chance to bid for direct control of public funds. This will encourage greater competition in the market as we strive for sustainable growth."

Charlie Mayfield, who chairs the John Lewis Partnership and the UK Commission for Employment and Skills - which has campaigned for firms to have more control over vocational training - said: "Too often the skills system appears to businesses as a Government-led enterprise rather than one led by employers.

"We need more businesses working together with their supply chains, sectors or localities to develop the skills they need. The best way to do this is to route funds directly to employers, placing the responsibility and reward for how money is spent with the employer, not Government."