David Blunkett, the Secretary of State for Work and Pensions, insisted the agency was making continuing progress, although he acknowledged: "Some significant problems remain with the new computer and telephony systems."
The report showed staff numbers fell from 10,215 to 9,750 during the past year, despite warnings from the Commons work and pensions committee that cutting jobs would be a "massive breach of trust" for the workforce.
David Laws, the Liberal Democrat work and pensions spokesman, said: "It is time they scrapped the CSA and simplified the system for collecting payments. The backlog of cases has grown over the year. Just 66 per cent of fathers are complying with maintenance assessments, well below the CSA's own target of 78 per cent, and accuracy rates have plummeted.
"With cases costing just under £200 each to administer, it almost makes the problems with tax credit system look mild."
The report, released as a photocopied document amid a flood of publications before Parliament breaks for the summer, said the backlog of cases being processed stood at 263,000. Only two-thirds of non-resident parents were paying towards their children's upkeep, while accuracy had fallen from 82 per cent to 75 per cent last year.
The Public and Commercial Services Union said staff were leaving in large numbers because of the stress of dealing with the computer chaos.