The system, supplied and supported by Oracle, can only be accessed by half the expected number of employees at one time, according to an internal document seen by Computer Weekly.
Due to load-balancing problems, the agency's regional offices have been divided into two groups which are only allowed to access the system at certain times. Only special circumstances exempt users from this rule.
The system, named 1B1S (One Business, One System) went live at the beginning of April. There was no period of parallel running with the agency's legacy systems.
An Environment Agency IT department memo described the problem to IT staff. "At present load balancing isn't working and only one server is being used, effectively meaning 1B1S is running at 50% - hence the performance problems," it said.
A spokeswoman for the agency said it was able to pay its 11,800 employees and bill 50,000 customers on time but did not deny ongoing performance problems.
"The speed of the system has not been as good as the agency requires and Oracle is giving high priority to resolving this by implementing a major hardware extension to its system and tuning the software configuration," she said.
"In the meantime, the agency is optimising performance of the system for priority users and all essential activities by timetabling user access. This arrangement has enabled the successful payroll, billing, payments and procurement activities, as well as allowing 7,000 expenses claims to be made online.
"We are working with Oracle to ensure that the new system works to its potential as soon as possible so that the expected benefits to employees and the environment can be realised."
Oracle is involved in building the £325m NHS HR and payroll system and also has a role in the £2.3bn national programme for IT.
An Oracle spokeswoman said, "Oracle is working closely with the Environment Agency to assess the current situation and to ensure that all matters specifically related to Oracle software and services used in this project are identified and resolved in a timely fashion."