The £95 million Pathfinder scheme to improve housing in the West Midlands' most deprived communities came under fire from the National Audit Office today.
The official spending watchdog criticised the housing project in Sandwell and parts of Birmingham, warning there was no evidence it made a difference.
The criticism was echoed by MP Khalid Mahmood (Lab Perry Barr), who attacked the scheme for failing to consult residents, and for failing to clean up derelict homes.
He said one of the project's few concrete achievements had been to introduce a webbased letting service, allowing residents to find suitable properties - in an area where few people had access to the internet.
The MP praised the Government for trying to regenerate the city but said Birmingham City Council, one of the bodies responsible for managing the local Pathfinder, had let it down.
The Government introduced nine Pathfinder schemes in 2002 to tackle the problems of neighbourhoods with very low housing demand.
The affected areas, mostly in the north of England, typically contained large numbers of derelict properties.
A scheme covering Sandwell, Handsworth, Winson Green, Lozells, Newtown and Aston was named Urban Living. It has a budget of £95 million between 2002 and 2008.
In a report published today, the National Audit Office said low demand for housing was now less severe in the Pathfinder neighbourhoods, which have narrowed the house-price gap with surrounding areas.
But it said it was "not possible to identify a causal link" between the Pathfinder activities and these changes in the housing market, which may be due to other factors such as the influx of workers from eastern Europe moving into cheap housing in run-down neighbourhoods.
Meanwhile, there were concerns that in some areas, the Pathfinders tried to press ahead with demolition projects before engaging sufficiently with local people to explain their plans.
Sir John Bourn said, head of the National Audit Office, said: "Housing Market Renewal is a radical programme but it is a high-risk
approach. While there have been physical improvements in some neighbourhoods, it is unclear whether intervention itself has led to improvement in the problems of low demand. And in some cases intervention has exacerbated problems in the short term."
Urban Living has acquired 1,458 homes in Birmingham and Sandwell since 2003, and demolished 748. It has refurbished 6,753 homes, today's report reveals.
Mr Mahmood said: "I wholly agree with the National Audit Office's concerns.
"It is an absolute disgrace what has been happening in Birmingham. There has been no consultation with elected politicians and no consultation with the public.
"They have approached everything in a top-down way and haven't really delivered anything in three years. It has been a huge waste of money and effort."
He added: "They are still working on their master plan for the area, after three years.
"We have areas where there are large numbers of derelict homes, in places like Aston, Lozells, Handsworth and Smethwick, and you would have thought their aim would be to clean these up."
John Lines, Birmingham City Council's cabinet member responsible for housing, said Mr Mahmood had been invited to discuss the scheme's progress but had failed to turn up to two meetings.
He said: "If Mr Mahmood wants to meet me or any council officer, he knows that he can.
"He is trying to cover up for cuts in Government funding for Pathfinder schemes."
A spokesman for the Department of Communities and Local Government insisted Pathfinders had made "significant progress".
He said: "We are confident that this programme will continue to revitalise some of our most deprived neighbourhoods in the years ahead.
"This programme has always been about improving the homes, communities and neighbourhoods where people live."