A House of Lords committee has warned of the "very damaging" impact of diverting money from the European Social Fund away from richer countries like the UK to help poorer European nations after 2013.
It means deprived areas of Yorkshire and the Humber – which are to receive 395 euros between 2007 and 2013 – will lose out at a time when they are still likely to be recovering from recession.
During the economic crisis millions of pounds has been used to fund courses for workers to improve their skills or retrain so they can find work, while parts of South Yorkshire have particularly benefited as they struggled to recover from previous recessions.
Baroness Howarth, chairman of the House of Lords EU Sub-Committee on Social Policy and Consumer Affairs, said: "We strongly disagree with the Government's position that more prosperous member states should stop receiving ESF funding.
"Such a move could mean the UK would lose out on significant funding which is vital in helping the unemployed back into work in poorer areas of the UK.
"The UK will receive nearly E4.5bn euros from the ESF between 2007-2013; to lose that sort of investment in improving employment prospects in the current economic climate would be very damaging. One of the key features of the ESF is that it is an expression of solidarity between EU citizens so it would be wrong to limit access to it only to poorer Member States."
Between 2007 and 2013, South Yorkshire alone will receive E180.7m, and the rest of the region is getting E214.9m from the fund which aims to tackle unemployment and improve skills in deprived areas. After 2013, however, distribution is set to be changed to take into account new and often poor members of the EU.
Last year colleges and training providers were given 14.5m to pay for short courses to update existing skills or start to retrain in new occupational areas
In other schemes 100 people a year across South Yorkshire are taught about all aspects of running a business to help them become self-employed, and hotspots of young people not in education, employment or training have also been targeted.
The Department of Work and Pensions said: "Since 2007 the England European Social Fund programme has helped 67,000 unemployed or inactive people get jobs. We are targeting this funding through programmes that offer the best support to people who are unemployed or facing redundancy, including continuing to provide extra help that some disadvantaged people need to tackle barriers to work and get a job.
"We welcome this report and will consider the Committee's recommendations and respond to them in due course. The future of the ESF after 2013 will be examined as part of the review of the EU Budget."