The party's shadow youth minister Steve Reed said that while Labour supports the NCS in principle, he has previously warned of a lack of proper oversight and raised questions about the amount of money being handed to the programme while other youth services are being cut.
He has called on the government to improve the performance of the NCS following what he described as a "damning" report by the public accounts committee and news that a regional provider has gone into liquidation, as revealed by CYP Now on Monday.
The report by the public accounts select committee on the flagship scheme concludes that it is time to "think radically" about what can be learned from the programme's achievements to date in order to fulfil its ambitions.
MPs said it remains to be seen whether NCS will become a "rite of passage" for all teenagers and meet its ambitious targets for increasing the number of participants or achieve its long-term societal aims.
Reed said: "The collapse of one of the NCS providers, along with this week's damning public accounts committee report, is a warning that the government needs to get a grip on where funding for the National Citizen Service is going.
"The NCS provides great opportunities for young people, but the government can't ignore underperformance just because David Cameron has a senior role there.
"The public need to know that every penny spent by the NCS is better spent by them than on the many other youth activities the Tories have cut.
"Turning a blind eye to failings at the NCS will just fuel concerns that it is little more than a Tory vanity project.
"The NCS can do great things for young people - but only if the government makes sure it's run effectively."
CYP Now reported on Monday that Engage4Life Limited - one of 10 main providers awarded regional contracts worth close to £1bn to deliver the NCS between 2015 and 2018 - went into liquidation 14 months ago.
A report by the official liquidator, filed last week, reveals that the NCS Trust is claiming it is owed £780,000.
Michael Lynas, the chief executive of NCS Trust, has stressed that public accounts committee report recognises that NCS has already had a "real impact" on the confidence, life skills and community engagement of young people taking part.
"We are grateful to the committee for their recommendations. We are always seeking to strengthen NCS, reach more young people, deepen our long-term impact and deliver even greater value for money," he said.
The final stages of the National Citizen Service Bill, which will place NCS on a statutory footing, are due to take place today.