The Commons public accounts committee has described the introduction of the Inland Revenue's new tax credits system as "nothing short of disastrous".

It estimates that up to £2 billion may have been paid in error.

The MPs found that the department should have been more cautious and realistic in fixing the timetable and assessing the resources needed for setting up and testing new tax credit IT systems.

It reported that the adoption of the new system, which replaced the Working Families' and Disabled Person's Tax Credit schemes, resulted in a catalogue of errors and loss of public funds.

Noting that several hundred thousand claimants failed to receive their money on time, the committee says the IR should have devised more comprehensive contingency arrangements.