Minsters have written off £1.92billion in child support owed by absent parents.
Officials say some debts were too expensive to chase or computer systems could not cope.
And a “reduced level of service” at the Department of Work and Pensions in lockdown has made problems worse.
But a report by the House of Commons Library suggests the loss could even be as high as £3.7bn.
Labour MP Rupa Huq, chair of the All-Party Parliamentary Group on Single Parent Families, said: “Children are suffering because of the incompetence of Britain’s child support system.”
And Shadow Work and Pensions Secretary Jonathan Reynolds added: “It is wrong to write off unpaid child support.”
According to a Commons Library report, 970,000 parents, mostly mums, may have missed out on up to £2.5billion they were owed – an average of £2,577 each.
And the study claims taxpayers covered £1.2billion in benefits for 370,000 cases the Government took responsibility for.
Some of the debt written off dates to 1993, when the disastrous Child Support Agency was set up.
The Child Maintenance Service replaced it in 2012 but arrears collection rates are as low as £1 in every £370, the report found.
By last October, officials had given up collecting outstanding payments below £500 – and up to £1,000 if the money had been owed 10 years or more.
The National Audit Office and single parent charity Gingerbread said the Government is not giving enough resources. Gingerbread also said not using enforcement powers is “extreme negligence”.
The DWP insisted the figures in the Commons study are “an overestimation from the outdated CSA system” and the debt was £1.92bn, adding: “In the last year nearly £1billion was collected.”
