David Cameron's national citizen service (NCS) would cost more than all youth services provided by local authorities put together.
MPs have called for a radical rethink of the "regrettable" proposals to give every 16-year-old the chance to participate in a two-month summer scheme of outdoor activities and community service.
Even if half of all 16-year-olds take part the programme could have a price tag in excess of £350 million every year, a report from the education committee found.
That would come at a time when youth services suffer "disproportionate" cuts, forcing them to rely more on funding from charities, businesses or private sources.
"The government's idea of using the national citizen service to inspire young people to engage with their communities, mix socially and build their skills is a good one," committee chair Graham Stuart said.
"However, the pilots are proving to be expensive and full roll-out would be hard to justify when cuts, which the government itself calls disproportionate, are impacting existing youth services provided by local authorities."
The pricy nature of the summer programme will not come as a surprise to chief secretary to the Treasury Danny Alexander, who attacked the proposal when it was launched during the general election campaign by Mr Cameron and actor Michael Caine.
"The Conservatives are living in cloud cuckoo land if they think they can provide a national citizen service on the cheap," Mr Alexander said last May.
"Once again the Tories have made an enormous spending commitment without the foggiest idea of how they're going to pay for it."
MPs suggested adapting the NCS so that it accredits existing programmes, as well as introducing new resources into the sector.
Tories hope the plan would help improve community cohesion, by forcing teenagers from a variety of different backgrounds to mingle together.
It would involve both residential and at-home components and would be delivered by independent charities, social enterprises and businesses.
"The national citizen service has the power to transform future generations and help transform our nation as a result," Mr Cameron said last April.
"Frankly I can't wait for it to start."