Full compensation has been demanded for thousands of families who wrongly had their tax credits stopped after the Government announced it was terminating its contract with the firm hired to check claims.
Ministers have ended the deal with Concentrix with immediate effect after previously announcing they would not extend the current contract beyond its planned expiry next May.
Opposition MPs seized on the news and insisted the Government has a lot of explaining to do.
SNP MP Tasmina Ahmed-Sheikh said: "There are so many questions for the UK Government still to answer about this disastrous contract, and the terrible impact their mismanagement has had on so many families who have done nothing wrong.
"We need proper answers now about what exactly happened within Concentrix so that we can ensure that this never happens again.
"Now all those families who lost out on their tax credits payments must receive full and proper compensation for their hardship."
Jon Thompson, chief executive of Her Majesty's Revenue and Customs, said: "We have reached agreement with Concentrix to exit this contract early.
"HMRC's dedicated staff have cleared all of the cases transferred from Concentrix while striking the right balance in both providing the standards of service that customers rightly expect and bearing down on error and fraud in the tax credits system.
"This is the right outcome for customers and for the taxpayer. I'm also pleased to receive 250 Concentrix staff, who will help us to deliver our priorities, offering job security to them well beyond the scheduled expiry of the contract in May 2017."