More than 500 civil servants have been deployed to help a private company sort out problems caused by 45,000 tax credit claimants having their benefits stopped.
Concentrix apologised for failures that have left some people with no benefits for up to two months.
The US firm has been accused of incorrectly withdrawing tax credits from many hundreds of claimants.
It was told in September that its HMRC contract would not be renewed.
Officials from HM Revenue and Customs told a committee of MPs that a breakdown in customer services at Concentrix, had resulted in only 10% of calls being answered on some days.
Thousands of people have had their tax credits stopped after Concentrix said they were making fraudulent claims - one woman was told she was in a relationship with a chain of newsagents, another with the philanthropist Joseph Rowntree, who died in 1925.
Claimants, in what was sometimes an emotional testimony, told the committee they had been forced to borrow money and go to food banks as a result of the problems.
The Work and Pensions Select Committee was told that of the 45,000 payments stopped, nearly 15,000 had appealed so far and that "90% - 95%" had been successful in overturning the decision.
HMRC officials said they first became concerned of problems at Concentrix in August when they started receiving reports that only 10% of calls were being answered within five minutes - the target was 90%.
Jon Thompson, chief executive of HMRC, said "a collapse in basic customer service" had occurred caused by too few staff being on hand, and that he'd personally taken the decision not to renew Concentrix's contract.
The firm was working with HMRC to reduce fraud and error in the tax credit system.