From July, unemployed young people in the Shoalhaven and 17 other areas will have to work 15 hours a week to get the dole.
But welfare groups say restarting work for the dole will be less effective than wage subsidies.
Job seekers aged 18 to 30 in selected areas who have been receiving Youth Allowance or Newstart for 12 months or more will be required to undergo about 15 hours a week of compulsory work for the dole for six months.
The areas targeted in the first phase have high unemployment.
The government will not need to change legislation to restart the program initiated under the Howard government.
The National Welfare Rights Network said work for the dole had proven ineffective in the past as a way of getting people into long-term jobs.
It has called for a greater focus on new skills, providing work activities that offer a better chance of getting into long-term jobs and increasing and indexing payments for participants.
Network spokesman Gerard Thomas said previous studies of work for the dole found that while some people benefited, many had less time to look for work.
He said wage subsidy programs had a better success rate.
A government study showed 47 per cent of extremely disadvantaged job seekers in wage subsidy programs were still in work after six months – more than double that under the previous work-for-the-dole program.
Australian Council of Social Service chief Cassandra Goldie said the focus should be on opening up job opportunities for young people through joint ventures with business leaders, investors, communities and social services.
‘‘A first step would be to increase the availability of places in cost-effective wage subsidy programs, mentoring, career counselling and vocational programs,’’ she said.