The introduction of universal credit remains on track, welfare officials insisted in response to Labour claims that IT troubles had left the new system in chaos.

Shadow work and pensions secretary Liam Byrne said family tax credits were at risk because work on a £500 million contract for the computer system had been halted.

It was also reported by the Guardian that hundreds of IT staff had been stepped down.

"Universal credit has descended into universal chaos and millions of families' tax credits are at risk because ministers would not listen to clear and repeated warnings issued to them since November 2010," Mr Byrne said.

"Iain Duncan Smith must now come before Parliament and account for the incompetent mess his department has become. We were promised universal credit would be the answer to all our prayers but now it has descended into one giant mess."

It came ahead of a Commons debate about the scheme, which replaces most working age benefits.

A Department for Work and Pensions spokesman said: "It's categorically not true to say that work has stopped on universal credit. All of our suppliers are working with us to deliver universal credit from April. Our plans have not changed."

It was "pretty standard" that the interim chief executive of the universal credit project, David Pitchford - appointed in February after the death of his predecessor - had been speaking to key suppliers, he added.

Pilots of the new system are due to start at the end of April before it starts to be extended to all claimants from October.

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