The Work'n It Out service supports teenagers aged 15 to 19 who leave school to get a job, or move into training or tertiary study.
The free service is available to school leavers from South Canterbury to Southland.
Staff contact each youth to check how they are progressing. If progress is favourable, they keep in touch every six months until they turn 20, otherwise they provide mentoring, career advice, support with job search skills and workplace support.
From July 2011 to March 2012, 3266 young people were registered with the programme in the Southern region.
Dunedin Mayor Dave Cull said it was "successful" and "did quite a lot of good".
However, Work and Income head Janet Grossman said the organisation was in the tender process for a new youth service, part of the Government's Social Security (Youth Support and Work Focus) Amendment Bill, which was introduced in March.
One of focuses for the Bill was how Winz worked with young people who were at risk of long-term benefit dependency.
"The current Work'n It Out youth service has a broad focus, providing support to most school leavers in the Southern region. We know the vast majority of school leavers are able to move into work or training on their own.
"However, some 16 and 17-year-olds struggle and unless we help them, many will end up on a benefit when they are 18. The new approach will allow us to intervene before problems become entrenched, by focusing resources where they will make the most difference," she said.
Under the new service, which focuses on at-risk 16 and 17-year-olds, young people would work with a service provider, which would give them ongoing support and mentoring to achieve educational outcomes.
"The development of this new approach does not mean the needs of others will fall through the cracks."
Mr Cull believed the new approach was "fine", but questioned why it should be implemented at the cost of the current Work'n it Out format.
"There is a big fear that all that good work will be wasted and we will be worse off," he said.
He and other Southern mayors were concerned about the high rate of unemployment for 15 to 19-year-olds - 24.2% in the December 2011 quarter.
They had approached the Ministry of Social Development about continuing Work'n It Out, but had not yet received a response.
Clutha Mayor Bryan Cadogan was "absolutely gutted" by the changes, which he said would take effect in July.
He had believed the scheme would be taken nationwide as a "blueprint" transition service because it had an 87% success rate.
However, the ministry instead "picked the teeth out of it".
"I defy anyone to identify an at-risk kid. The only way you can identify them is to contact every kid and see how the cards fell for them."
The changes also "blindly ignored" the fact 53% of those using the service were aged 18 and 19, and the new service would only be triggered when young people applied for a benefit, he said.
"We were working with kids that had the school support, the family support ... now we are going to strip all that away."
While he thought the reduced scheme would benefit areas which did not have any transition service, he did not want his area to be "dumbed down".
