A £2.4bn coalition scheme to boost England's economy has been spending up to £200,000 to create one job, auditors have revealed.
The Regional Growth Fund was set up two years ago to help generate private sector posts in areas that have historically been reliant on the state.
Prime Minister David Cameron and his deputy Nick Clegg used a joint public appearance this week to praise an initiative they say could create 41,000 extra jobs over the next seven years.
But a National Audit Office (NAO) report on the first £1.4bn of awards to businesses indicated taxpayers would have received much better value for money if bids had been more closely scrutinised.
"Over 90% of the net additional jobs could have been delivered for 75% of the cost, with the cost of each job then being £26,000," the report said.
"The cost per net additional job supported by the Fund varies from under £4,000 to over £200,000."
The auditors said the fund was targeting the areas of the country that needed it most, but was not performing any better than previous equivalents under Labour.
"If the Fund delivers in line with expectations, the average cost to the Fund of each net additional job would be £33,000," they said.
"Value for money was not optimised because a significant proportion of the Fund was allocated to projects that offered relatively few jobs for the public money invested.
"Applying tighter controls over the value for money offered by individual bids would improve the Fund's overall cost-effectiveness."
Business Secretary Vince Cable said: "The NAO's report recognises that the Regional Growth Fund is working.
"It shows that the RGF is set to create and protect 328,000 jobs for people in communities that need the most support and help companies grow.
"It shows that our processes are robust, competitive and unbiased. It shows that we chose to support the highest quality bids offering best value for money.
"We have already put in place some of the NAO's recommendations such as making more administrative resources available, which means projects are being processed even faster. Round three will create thousands more jobs."