The tender for replacing the council's 20-year-old mainframe system went out this week with a stark warning from Camden and an admission that there were "risks" involved in replacing the successful old system.
Lesley Pigott, head of benefits at Camden Council, said: "There is always a risk when you take on a third party to replace something that has served you well, but we will do all in our power to ensure that all goes well.
"The new supplier will be made very aware that they must meet our high standards and we will accept nothing less."
Camden's current mainframe system and in-house benefits team have established one of the best housing and benefits systems in London, during a period when many other councils have spent years struggling with poor outsourced services.
A report from the Audit Commission in October described the successful outsourcing of housing benefits services as "rare".
Pigott insisted that Camden's housing and benefits service would not be outsourced. "This is a very much cherished service and we have no intention of outsourcing it," she said. "No one could beat our cost or performance."
The Camden benefits team was named the benefits team of the year for 2000 by the Institute of Ratings, Revenue and Valuation, the professional body for housing benefit.
The mainframe system is being replaced as it is getting increasingly difficult to update, and the council believes it can provide an even better performance with a new computer system.
"Many modern developments, especially online services, cannot be done on this system, and the switch to a new system will improve council and staff efficiency and provide a better service to the public," Pigott said.