Youth Insearch CEO Heath Ducker said many young people on welfare had underlying issues, such as trauma, abuse and neglect.

"They don't have the motivation, mental health or wellbeing to go out and look for employment," Mr Ducker said.

"This project is about trialling a new approach to break the cycle of welfare dependence."

"We'll provide pre-intervention for young people before they are linked to employment, to them get them job-ready - and emotionally ready - to be able to sustain employment in the long term."

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At least a third of the money will be used in New England, with the rest being spread across the charity's operations in NSW, Victoria and Queensland.

New England MP Barnaby Joyce said he had been "lobbied intensely", particularly by people in the Tamworth region, to get more funding for the charity.

"I conveyed to the minister that Youth Insearch is something we know actually delivers real outcomes," he said.

"This is not only good for those within the program, but it's also good for taxpayers. The more we help someone on welfare, the more we save the taxpayer over the long term.

"The more we keep people in an effective job and away from many of the problems that come from living on social welfare, the better off we all are."

The government allocated the $1.1 million in its recent budget, which is yet to be approved.

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