CANBERRA - Australia will spend A$1.2 billion ($920 million) to expand its wage subsidy scheme for apprentices, Prime Minister Scott Morrison will say on Tuesday, the first step in a plan to wean the economy off a wider wage subsidy scheme.

The A$70-billion scheme, known as JobKeeper, through which the government subsidises wages for workers in businesses damaged by the coronavirus pandemic, is to run until the end of March.

Morrison has said the scheme will be replaced instead by targeted stimulus, the first stage of which will be an expansion of the scheme to pay part of the wages of apprentices.

"Last week's national accounts showed the comeback of the Australian economy is underway," Morrison will say, according to extracts of a speech seen by Reuters.

"However many businesses still need support and it's important our apprentices and trainees get opportunities to boost their skills and stay employed."

Figures from the Australian Bureau of Statistics last week showed the jobless rate dropped to 6.4% from 6.6%, better than market forecasts of 6.5% and down from a peak of 7.5% in July.

Australia's apprentice scheme will see the government pay half the wages of apprentices, up to a maximum of $7,000 each quarter for 12 months. It will now run until September 2022.

It will no longer be capped, Morrison will say, with the government expecting 70,000 new apprentices to be covered. ($1=1.3092 Australian dollars)

(Reporting by Colin Packham; Editing by Clarence Fernandez) ((colin.packham@thomsonreuters.com;))