The Post Office and the former Department of Social Security have been condemned for one of the biggest ever government IT failures - the benefits payment card project.
The powerful all-party House of Commons Public Accounts Committee (PAC) said there was "no excuse'' for the basic project management failures which cost the taxpayer £1bn on the pioneering PFI project.
The committee's Tory chairman, former trade minister Edward Leigh, branded the five-year saga "a sorry tale of waste" and the committee said it remained sceptical about whether the department - in its new guise as the Department of Work and Pensions - would be able to make a better job of any future major computer schemes.
The committee also criticised the Labour Government for costing the taxpayer tens of thousands of pounds more by taking 18 months to decide to scrap the failed project - originally known as Benefits Agency Pathway Post Office Counters.
Work and pensions secretary Alistair Darling leapt to the defence of the Government and his department, pointing out that the problems with the benefits payment card scheme started under the previous Conservative government.
Darling said he agreed with much of the committee's report, pointing out that it acknowledged that cancelling the project was the right course of action.
Leigh said, "This is a sorry tale of waste amounting to more than £1bn. There is no excuse for the department's failure to manage this project correctly, or for the very laboured process of actually putting it out of its misery.
"Better arrangements are now in place for managing government IT projects,
but for the moment my committee remains sceptical about the new department's ability to deliver.
"We shall certainly be watching their progress closely."
Darling, agreeing with a "substantial part" of the committee's findings, "particularly the fundamental conclusion that mistakes were made right at the start of the project in 1996", said, "It is a pity that Leigh has failed to point out that it was his government that entered into this disastrous project.
"The committee has acknowledged that the right decision was to end the contract - I did that. As the committee also acknowledges, new procedures have now been put in place by the Government."
The project, which aimed to replace paper-based payment of benefits with a magnetic strip card to be used in an automated machine, was abandoned in 1999 - the year it was due to begin operation.
The scheme would have affected 20,000 post offices, requiring the training of 67,000 staff to administer about £56bn worth of benefits each year.
The PAC report said that cancelling the project at a cost of £1bn "must rank as one of the biggest IT failures in the public sector".
It undermined plans to crack down on benefit fraud, use the Post Office as an IT platform for universal banking systems to combat poverty, pay most benefits, including pensions, by automatic credit transfer and allow claimants to withdraw cash from Post Office cash machines or across the counter.