The government is to excuse youngsters in difficult personal circumstances from the new requirement in England to be in education until the age of 18.
Schools Minister Jim Knight has told a Commons committee that groups of people should not be formally exempt.
But if there is a good reason for not participating, such as homelessness or addiction, it is "absolutely crucial" no enforcement action is taken.
Liberal Democrats said more had to be done in the most difficult cases.
Legal changes
The government is raising the education leaving age in two stages, in an effort to improve the nation's skills.
By 2013, all pupils will have to stay in education or training until the end of the school year in which they turn 17. By 2015, this leaving age will be raised to the 18th birthday.
The issue of "reasonable excuse" for not participating, cited in the Education and Skills Bill, was raised by the Commons children, schools and families committee.
Mr Knight has now written to Liberal Democrat committee member David Laws to say the government believes all young people should continue learning where possible.
Suitably flexible and personalised learning needs to be provided, he says.
He adds: "However, I do of course accept that there will be young people who temporarily or for a longer time, cannot in practice participate due to their individual circumstances."
He says there are many reasons of what this might mean, such as:
The government undertakes to issue detailed guidance to local authorities.
"We are keen to work with local authorities, voluntary sector organisations, Targeted Support services and other interested parties in developing that guidance."
An element of local discretion will remain "extremely important".
Another option
Shadow children's secretary Michael Gove said: "I welcome the government's climbdown and their recognition the bill needed to change.
"I hope they will continue to listen to opposition arguments to improve this measure."
Mr Laws said the local authority panels who would make decisions about those not in education needed to have another option - of sending them to a supported setting, to deal with drug addiction for example.
"They are going to have responsibilities. What they need is flexibility and the guarantee that funding will follow that.
"Some local authorities aren't doing a very good job of dealing with those who are 14, 15 and 16 as it is," he said.
"They may end up either taking draconian action or just turning a blind eye to some of these young people."
'No change'
A spokesman for the Department for Children, Schools and Families said there had been no change of policy or amendment to the bill.
"We have always been clear that raising the participation age is not about criminalising young people," he said.
"This is about helping all young people, especially the most disadvantaged, to continue in education or training until they are 18.
"Being completely rigid and not allowing any flexibility for very ill people or others with exceptional circumstances would be counterproductive."
The "personal circumstances" excuse is likely to affect tens of thousands of youngsters.
Most already are in some form of education or training, perhaps with an employer, beyond the age of 16.
The group defined as "Neet" - not in employment, education or training - is not a precise number but an official estimate.
It includes some 20,000 teenage mothers.
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