Plans to scrap the existing Child Support Agency and completely redesign the system of child support in the UK were unveiled by Work and Pensions Secretary John Hutton yesterday.
He also told MPs he would plough £120 million into an emergency package designed to clear the existing backlog of cases, and promised tough action against defaulting parents.
Mr Hutton announced a review of child support, conducted by ex-Liverpool City Council chief executive Sir David Henshaw, which will report back by the summer.
The Work and Pensions Secretary said an earlier review had estimated that at least an extra £300 million would be needed to make the existing system work - but even then only half of lone parents would receive maintenance.
He said he would not commit public money in those circumstances.
To beef up existing arrangements, before a new system can be put in place, Mr Hutton announced £30 million would be spent farming out debt collection to private firms. Another £90 million would be part of the emergency package.
He said his crackdown on defaulting parents would include using credit reference agencies to identify potential defaulters, and increasing the use of orders deducting payments from the wages.
Mr Hutton refused to blame staff at the CSA for the crisis, which includes a backlog of more than 300,000 cases.
But he told MPs: "I have concluded that neither the agency nor the policy is fit for purpose."
He said he had asked Sir David "to completely redesign our system of child support".
His review would start with considering what help could be given to parents to reach a fair solution of their own if relationships broke down.
In a separate statement released at Westminster Mr Hutton said: "I will not walk away from enforcing the law and getting tough on those who cheat their children out of the best possible start in life."
He said he would consider even tougher sanctions on defaulting parents, but would be guided by Sir David's review.
Sir David said in a statement: "I am keen to get started and work with the team to come up with a redesign of child support."
Tory spokesman Philip Hammond said there had been a failure of political leadership at the Department of Work and Pensions Department over a long period.
Duncan Fisher, chief executive of charity Fathers Direct, said: "A reformed system must endorse children's rights to support from both parents, in terms of both cash and care.
"A reformed system of child support must be part of a broader approach to supporting separating families.
"It should understand better the often complex reasons why non-payment and lack of care occurs.