Charities reacted with horror as the Government announced that Atos and another private company, Capita, had won three contracts to run a new work-capability check for disabled people being brought in next year.
The Government has suggested that half a million people could lose their benefits as part of the reforms, which affect working age disabled people from April next year. Children and pensioners will not be affected.
The companies will assess disabled people for a benefit to help with their higher costs of living, called the Personal Independence Payment (PIP), which replaces the Disability Living Allowance (DLA).
Atos, which has been criticised for carrying out inaccurate assessments on the unemployed, will be responsible for tests in Scotland, London, the North-east, North-west and South of England, while Capita will administer Wales and central England.
There have been huge concerns about Atos's existing scheme, with criticism of the "tick box" nature of the tests and accusations of a high rate of inaccurate decisions, with 40 per cent of rulings being overturned on appeal.
Steve Ford, chief executive of Parkinson's UK, described the news as "another bitter blow for sick and disabled people".
In a letter to The Independent, Mr Ford wrote: "It is hugely concerning to see that Atos have been given the green light for the Personal Independence Payment contract.
"Assessments carried out by Atos have led to many people being forced to appeal against decisions that are plainly wrong. How can someone with Parkinson's – a progressive neurological condition – have an assessment report that implies they will be ready for work again in six, 12 or 18 months?"
Gillian Morbey, chief executive of the deafblind charity Sense, said: "We are concerned that the Government has awarded another contract to Atos," she said. "Their track record of poor initial Work Capability Assessments is costing more in the long run."
Hayley Jordan, co-chair of the Disability Benefits Consortium, a coalition of charities representing disabled people, added: "PIP will be a lifeline for disabled people and it is essential this difficult process is managed well."
The Government yesterday described the DLA – worth up to £131.50 a week – as an outdated benefit and said the new assessment would "ensure that, unlike in DLA, disabled people will be able to have a detailed discussion with a health professional about how their impairment affects their everyday lives".
Ministers have expressed concern at the rise in the number of people claiming the benefit, which has gone from 2.5 million nine years ago to 3.2 million this year, at an annual cost of £13bn.