NSW Education Minister Adrian Piccoli has confirmed the funding program that supported apprentices and trainees from disadvantaged backgrounds will be axed in December.
The decision will affect 36 group training organisations that get subsidies under the Joint Group Training Program.
The organisations employ more than 7900 apprentices and trainees — about 5 per cent of the state's 169,000 apprentices and trainees.
A spokesman for the minister said the government was cutting a vocational training program that was duplicated by a federal government scheme called State Training Service.
But federal Parramatta MP Julie Owens said the O'Farell government's cuts would leave a $1.7 billion gap.
"These cuts go too far," she said. "They're a curtain-raiser for what Tony Abbott is planning for the education sector.
"The federal government is putting about $2.3 billion into the NSW Training system.
"But at a time when we need to grow Australia's skills base, the NSW Liberals are cutting essential funding that will have all sorts of negative effects."