Controversial disability benefits assessments are still off target despite a "staggering" doubling of the cost to the taxpayer to £579 million a year, public spending watchdogs have warned.
The National Audit Office (NAO) said the Department for Work and Pensions (DWP) still did not have proper control over the outsourced regime, despite making significant improvements and a high-profile switch of private provider.
Expected savings to the welfare budget as a result of the test had been slashed from £1.1 billion over the next three years to just £400 million as firms struggled to recruit the specialist staff needed to meet the required volumes, the NAO warned.
And at least £76 million of taxpayers' money had been wasted by the failure to get a new IT system up and running - more than two years after it was supposed to be in place, it said.
Labour accused ministers of presiding over a "shambles" and charities said delays continued to cause "immense stress and anxiety" for disabled claimants.
So-called "work capability assessments" brought in to slash the numbers claiming Employment and Support Allowance (ESA) have been dogged by delays and controversy since their introduction under Labour - with disability campaigners pointing to evidence of rising suicide and depression rates.
Private provider Atos quit its contract early amid protests and was replaced last year by US firm Maximus, with the DWP seeking to improve the system by requiring more face-to-face assessments and setting tough targets.
The NAO said the average time to process ESA claims had been cut from 29 to 23 weeks but there remained 410,000 outstanding claims in August, about 280,000 of them overdue.
A DWP spokesman said the number in the system had fallen to 321,000 by December, a backlog of around 190,000 and a cut of 62% since March.
Assessments for Personal Independence Payment (PIP) now take four weeks on average, compared to a peak of 29 weeks in mid-2014.
But difficulties finding hundreds more qualified medical staff and rising salaries have helped pushed the average cost of each assessment up by 65% from £115 to £190 - or £595 million for the 3.4 million assessments required by 2018/19.
The NAO said that despite almost doubling the size of its performance management team to 80 officials, the DWP "continues to struggle with setting targets and requirements with clear evidence".
"Recent performance shows the department has not tackled - and may even have exacerbated - some of these problems when setting up recent contracts," it concluded.
NAO head Amyas Morse said: "The Department has addressed some of its immediate operational issues in managing contracted-out health and disability assessments but now needs to take action to break a perpetuating cycle of optimistic targets, contractual underperformance and costly recovery."
MP Meg Hillier, who chairs the Commons public accounts committee, said: "The Department's approach has been unclear, its targets untested and consistently missed and future delivery is under threat.
"With the annual cost of assessments now expected to rise to a staggering £579 million in 2016/17, taxpayers have been left to foot the bill.
"The Department needs to do more to ensure private providers deliver a better deal for sick and disabled people as assessments have a huge impact on their ability to access vital cash to live with dignity."
The DWP said it would consider the NAO's recommendations for improvements.
"To ensure that support is targeted correctly and that we achieve value for money, we operate a strict competitive contract tendering process and factor all costs into departmental spending plans. This also ensures that the quality of the assessments for claimants improves at the same time," a spokesman said.
Shadow minister for disabled people Debbie Abrahams said: "It's yet another example of incompetence from the DWP and a thorough overhaul of the systems is desperately needed."
Dan Scorer, head of policy at learning disability charity Mencap, said: "The DWP has been aware of problems with the benefits assessments for a number of years, yet people with a learning disability who rely on the support from benefits are still suffering from a system that fails to help the people it is designed for."
PCS general secretary Mark Serwotka said the report "casts grave doubts on the policy of privatising this very sensitive public service".
He added: "Claimants need to feel they are being supported, not targeted, and we will continue to press for this work to be brought back in-house."