Education Minister Dolores Cristina offered her "sincere apology" for the suspension of EU educational programmes when she met students gathered outside Parliament to petition the funds' immediate reinstatement.
Mrs Cristina said the government was doing its utmost to solve the problem as fast as possible.
Other countries had already offered help, which would minimise the problem, just as Malta had assisted Cyprus when it experienced the same suspension in 2008, and talks were ongoing.
"The EU is a rigid structure and rightly so but the truth is Malta faced a steep learning curve.
Our administrative shortcomings (which led to the suspension of the programmes) were minimal compared to others but they were shortcomings nonetheless."
The European Commission had first highlighted deficiencies in the management of funds by local European Union Programme (EUPA) Agency responsible for the projects nine months ago. It was not satisfied with the changes implemented and recommended that changes be made by last September. It was still unsatisfied with how the Maltese office handled the matter and so suspended the funds.
Mrs Cristina said she was still waiting for a letter from the European Commission, which would explain exactly what the temporary suspension of the educational programmes meant and what was expected from Malta.
The students were outside Parliament to present to MPs a petition signed by 41 organisations.
Prime Minister Lawrence Gonzi said that, although it was a question of administration and not fraud, the issue was still being taken seriously and he wanted to know who was responsible.
The issue has become a political hot potato with hundreds of students affected by the suspension.
The opposition spokesman for education, Evarist Bartolo told the petitioners Cyprus had lost its funding for 2008 when it experienced similar problems and he feared Malta could go down the same road.
Students, youth organisations, NGOs and even local councils have joined forces, declaring their support to the online petition, which is also appealing to MEPs.
The petition said that funds amounting to €4 million were entrusted by the European Commission to the European Union Programme Agency and meant to be managed in a sound manner. But, due to EUPA's failure to satisfy accountability standards, hundreds of individuals now risked losing "the opportunity of a lifetime".
Intended beneficiaries might have to face extra costs and had to be compensated, the organisations said, expressing satisfaction that the Prime Minister launched an inquiry into the mismanagement allegations that led to the suspension of the Youth in Action and Lifelong Learning Programmes.
Satisfied that EUPA was committed to providing University students with clear answers by next week, they augured it would not adopt a piecemeal approach to finding solutions and demanded a thorough and speedy investigation to be sure anyone responsible would be held accountable.