Last month colleges and training organisations throughout the UK that were running courses under Labour’s flagship New Deal scheme for the unemployed had their contracts cancelled.

The problem arose because Jobcentre Plus had its budget for training programmes slashed from pound;1,087 million in 2004-5, to pound;962m next year. Jobcentre Plus comes under the Department for Work and Pensions.

Now, 38 training companies in London and several more in the North-east, two of the hardest-hit areas, have learned some contracts are being reinstated.

The Association of Learning Providers, the national organisation which represents independent training companies, hailed the decision as a victory for its campaign against the cuts.

The association had claimed the cuts in JCP contracts meant that London and the North-east would be unable to offer training to the unemployed even though it is meant to be mandatory to provide it as one of the four New Deal options.

It also said that it left the capital unable to offer basic skills and courses in English for speakers of other languages to help refugees and asylum-seekers find work.

Paul Warner, ALP’s operations manager, said: “We raised the issue with Margaret Hodge, the minister for work, and she replied that basic skills, Esol, and New Deal options remain a priority.

“The resulting U-turn has meant that quite a number of companies that had redundancy notices printed off have since torn them up because they are back in business for another six months.”

He expressed concern, however, that some of the cash for the re-instated courses has been taken from other training companies elsewhere in the country that had already been informed their contracts were to be renewed.

“JCP is finding bits of money from all over the budget to get these contracts re-instated,” he added. “However, some of the money is coming from providers in other parts of the country who had already been told their contracts would be extended.”

One independent company, 5E in north London, was in the process of making 50 staff redundant when news of the reinstatement of contracts came through.

Raj Doshi, its director and founder, said: “We have already let go 25 people but we now think we can hang on to the others.”

A spokesperson for the Department of Work and Pensions, said: “The mandatory New Deal remains available throughout the country. Money is tight this year so we have had to terminate some contracts for non-mandatory programmes. We have tried where possible to make sure we cut those contracts that perform less well.”