The Government unveiled plans on Wednesday to "radically reform" apprenticeships, including moves to give training money directly to employers.
Ministers said the aim was to make it easier for firms to take on an apprentice and so create new jobs.
A consultation was announced on measures including giving employers freedom to choose training rather than having to go through a particular training provider.
Firms with up to 1,000 employees will be able to take advantage of a £1,500 apprenticeship grant for an extra year under moves outlined by the Business Department.
Business Secretary Vince Cable said: "Employers are the best people to judge what training is worth investing in. These reforms will mean just that.
"It gives them the power to train their staff to make sure their skills are relevant to the company while choosing from the wide range of courses available.
"These measures are all part of the wider reforms the Government is making to the apprenticeship system.
"By putting quality ahead of quantity and giving the training that companies actually want, we are helping to create jobs and support business."
Skills Minister Matthew Hancock added: "Small and medium-sized businesses are the lifeblood of our economy and by extending the £1,500 grant for a further year we will give them the skills they need to grow and help 35,000 more young people into meaningful employment.
"Currently, there are many examples of outstanding apprenticeships but we want this to be the case every time, so we are taking steps to make sure that they are more rigorous and as responsive to the needs of employers and individuals.
"By radically reforming the funding system we will allow employers to agree with training providers the content and price of training, ensuring greater competition both on quality and on price."
Michael Davis, chief executive of the UK Commission for Employment and Skills, said: "The labour market has seen a long-term decline in the number of entry-level jobs and, critically, there are too few good jobs for young people.
"Apprenticeships are a proven way of delivering highly-productive, well-trained and loyal staff, access to a successful career for young people and strong benefits for the exchequer and the economy as a whole. Yet only 15% of UK employers offer them."
Tim Thomas, of the EEF manufacturers' organisation, said: "For decades businesses have been left frustrated by the absence of a competitive training market which meets their needs.
"Numerous reforms have failed to deliver a demand-led system that can respond to employers' needs.
"Today's consultation recognises that funding needs to be put in the customer's hands - the employer. Government must now listen carefully to the views from industry and introduce a funding model that is simple, worthwhile, has longevity and encourages providers to develop more innovative approaches."
Martin Doel, chief executive at the Association of Colleges, said: "If the objective is to increase employer involvement in shaping apprenticeships, there could be many other incremental changes that could deliver this outcome.
"There have already been a huge number of funding changes in the skills sector and I question the need to make further significant changes to apprenticeship funding in the middle of a recession with youth unemployment at an all-time high.
John Allan, chairman of the Federation of Small Businesses, said: " The current apprenticeships system has been subjected to constant change undermining the brand and leading to confusion.
"We strongly urge Government to take its time with any reforms so that they get it right first time to create a system that will last for decades to come."