Homelessness charity St Mungo's has withdrawn from the work programme in another sign the government's flagship job scheme is failing the most vulnerable.

The charity, which was supposed to provide targeted help for the long-term unemployed in the £5bn payment by results programme, said no unemployed people had been referred to their services by contractor Maximus UK.

Mike McCall, St Mungo’s Executive Director of Operations, said in a statement they took the decision with "regret" but were concerned there was not "emphasis" on working with those who needed targeted help to find jobs: "We had hoped that, by delivering our services through the work programme, that we would be able to assist people who were long term unemployed and multiply disadvantaged gain jobs.

"We had not, however, received any referrals so have withdrawn but look forward to participating in future activities when we can be assured that there is sufficient emphasis on working with those that are furthest from the labour market."

Dame Anne Begg, chairperson of parliament's work and pensions select committee, told The Huffington Post UK the news was "concerning."

"What's happening to the people who need the specialist help? I'm really concerned as to what is happening to the people who must be put on the work programme who need extra help if the specialist sub-contractors [St Mungo's] are withdrawing. Where are they? They must be in the system somewhere."

The work programme, which has been running for a year, offers payments by results where companies are given 10% of money upfront by the government until they get people back into work. Employment minister Chris Grayling said in June 2011 the back-to-work scheme will help up to a million people gain employment in its first two years.

Dame Anne added: "The work programme has been up and running now for over a year, so it's really concerning that some of the sub contractors can't continue because they're the ones who deal with the most difficult clients."

Inside Housing report that London-based Single Homeless Project also withdrew from the £5bn programme because it was "not adequately resourced or structured."

A DWP spokesperson emphasised over 400 voluntary organisations were involved in the work programme. and pointed out charities left and joined the programme all the time.

A spokesperson said: "There's still provision for those complex needs. People with complex needs are going to be harder to help which is why we have people like the Prince's Trust and Salvation Army."

Maximus' managing director said in a statement released to The Huffington Post UK Bob Leach, Managing Director of Maximus UK, denied they were failing to identify vulnerable jobseekers to send to the charity, who helped 117 homeless people get employment and skills training last year.

"The relationship is one of a Work Programme ‘menu partner’, in which there is no subcontract, but by which Maximus will direct customers in need of the specific services provided by St Mungo’s and other organisations like them. Like all prime providers in the Work Programme, Maximus UK maintains a range of menu partners in order to best direct customers to the service most appropriate for their needs. Work Programme customers are referred to Maximus UK by Jobcentre Plus.

"Without any reflection on St Mungo’s, if no Work Programme customers have been referred to them, it means that customers’ needs have been better suited to the services provided by other organisations.”