The IT systems, the project management of their development and implementation, and the way staff were trained to use them were slammed in the report on the department's technology-driven efficiency initiative.
The report said that during the summer of 2005 people claiming benefits encountered "truly appalling service levels", with the customer service measure dropping to 26.8% in one contact centre group against a target of 81%.
The committee has also questioned whether the £362m spent on CMS, the case management system at the heart of the new working regime at the Department for Work and Pensions, had been wasted. CMS is due to be replaced by a completely new system from early 2009.
"It seems extraordinary that a system developed at great cost and introduced with some difficulty is so out of step with the future DWP IT strategy that there are plans to replace it incrementally before it has even been rolled out nationwide," the report said.
Chairman of the committee Terry Rooney said, "In its drive for efficiency, the government has caused a serious failure in customer service, staffing, procurement and IT. The measures taken to resolve these problems are neither sustainable nor robust."