The report said that if the RGF delivers the 41,000 full-time-equivalent private sector jobs predicted by the NAO, the average cost per job would be £33,000, compared to the £28,000 by the now-abolished regional development agencies.

The report is looking at the effectiveness of the RGF, which aims to boost private sector jobs and growth in areas heavily reliant on the public sector. It looked at the RGF's first two bidding rounds, in which the government provided £1.4 billion in grants and allowed private firms or public-private partnerships to bid for at least £1 million for job-creating projects.

Amyas Morse, head of the NAO, said: "Some of the funding was allocated to projects that offered relatively few jobs for the money invested.

"To achieve better value for money from the further £1 billion now available, the government should develop more challenging targets for the number of jobs projects should generate relative to their cost."

The NAO found "a significant portion" of the £1.4 billion was given to projects creating "relatively few jobs for the money invested".

The report also said it has taken "significantly longer than expected" to turn conditional offers of grants for projects into final offers, pointing to the fact that only about a third of approved projects have so far received final offers of funding.

It concluded that applying tighter controls over the value for money offered by individual bids, as well as allocating funding across more bidding rounds, could have created thousands more jobs using the same resources.