A Best Value inspection team recently gave the IT service a zero star-rating, citing low user satisfaction and a lack of effective performance management.
However, a spokeswoman for the council argued that the Audit Commission's IT inspection process is itself flawed.
She said, "The Audit Commission's Best Value report on the city council's IT service is inaccurate and poorly researched."
Inspectors reported earlier this week that the IT service lacks strategic direction and has no clear objectives linked to either the council's overall aims or the Government's modernisation agenda.
Mick Hannon, lead inspector of the Northern Region Best Value Inspection Service, said, "The council does have ambitious plans for the future delivery of services through IT but its improvement plan is weak."
The council needs to develop service aims that are clear and customer focused, he said.
The report acknowledged that the council had employed dedicated IT staff, but warned that users are dissatisfied with many aspects of service.
In response to the criticism, the council pointed out that its statement on Implementing Electronic Government had been accepted as satisfactory by the Government earlier this year.
Councils producing satisfactory Implementing Electronic Government statements will be eligible for a share of the e-government funding worth £325m over the next two years.
The spokeswoman said, "The Audit Commission, despite being aware of the framework we are putting in place to provide a comprehensive, high-quality IT service for the district's services, has written a report based on its own scoping exercise."
She also confirmed that substantial extra funds are being allocated to ensure improvement in the council's IT service.
"We have committed staff, a framework to strengthen the delivery of the service and every reason to believe our IT department will be able to provide a quality service in the future," she said.
The Best Value inspection was established to provide the public with an independent assessment of whether value for money is being delivered by councils.
Inspection reports judge how well a service is serving the population, based on a star rating from zero to three, with zero as the poorest rating. Inspectors also measure the likelihood of future service improvement.