A Sligo-based project, praised by gardaí and health boards for its work with marginalised teenagers, has lost its funding, partly because too many participants are from Dublin.
Culleenamore Riding Company, Strandhill, trains young people to work in the horse-racing industry.
The Tánaiste, Ms Harney, has told Ms Róisín Shortall TD in reply to a Dáil question that in the view of FÁS, the young people in question should be referred to similar projects in the Dublin area. She made the same point in a letter to Mr Eoin Ryan, the Minister of State with responsibility for drug programmes.
She also said: "The course running in the north-west region encountered local difficulties in integrating people with drug-related problems."
The director of Culleenamore Riding Company, Mr Eddie McDermottroe, says he now has only one trainee because of the withdrawal of funds.
In March, Garda Insp M.J. Barrett, Sligo, wrote to Mr McDermottroe: "A search was carried out on living quarters on persons attending the course under drugs warrant in early 2001.
"No drugs were found but signs of drug abuse were found. No one was arrested and no prosecutions were taken. I believe one person was let go from the course as a result of a search at the time."
He added: "I am aware that you enforce a no-drug policy on the trainees on your courses. I also believe you are carrying out excellent work and this is the feedback we get from the trainees on the course. I personally would give this course my 100 per cent backing."
In January, Mr Hugh Greaves, co-ordinator of Ballymun Local Drugs Task Force, wrote to say that two of three young people sent on the course "have already secured full-time employment in equine care".
A counsellor in the Northern Area Health Board wrote: "I have personally seen so-called 'no-hopers' happily detox and join your programme, one of whom is currently in Australia and another a professional jockey."
Dublin solicitor Mr Pól Ó Murchú, who has been involved in High Court cases on behalf of vulnerable children, wrote in March: "It is essential that this programme is followed through."
A letter written on behalf of the Tánaiste from the Department of Enterprise, Trade and Employment last month cited unhappiness with aspects of the course by the assessor for the national vocational qualifications (NVQ) in racehorse care.
Two days later, Mr McDermottroe got a letter from the Racing Academy and Centre of Education (RACE) at Curragh House, Kildare.
It said that as the internal verifier for the national vocational qualifications in racehorse care, it considered "the facilities, horses and equipment used for this course met the requirements of the BHTB [British Horse-racing Training Board] and RACE. Culleenamore also provides valuable counselling and literacy support to its students, many of whom have special needs."
In its letter to Mr McDermottroe in April, the Department also complained of "administration errors" which, it said, "grew ever more serious".
Mr McDermottroe told The Irish Times he could address those problems with "back-up, support and help".