The job-bridge scheme will no longer be an option for job-seekers in Carlow or Kilkenny.
Social Protection Minister Leo Varadkar will axe the scheme in September – and replace it with a more targeted scheme.
The system introduced in 2011, allows interns to work for between six and nine months, 30-40 hours per week, for an additional €52.50 on top of unemployment allowances.
About a third of the 46,500 people in the scheme went on to secure full-time employment.