The Work and Pensions Secretary today set out his plans for a slimmed down replacement for the Child Support Agency which, it is hoped, will be better at forcing parents to support their children financially.

The CSA is being scrapped after 13 years and numerous attempts at reform, and a new agency being set up to replace it, John Hutton announced in a House of Commons statement this afternoon.

Parents currently in the system will have the choice of coming to their own private arrangements or making a fresh application to the new agency.

More parents will be encouraged to make their own arrangements in future, so that the streamlined agency can concentrate on chasing payments from non-compliant fathers.

The new agency will wield extra powers to punish parents who fail to pay, including evening curfews to prevent fathers going out after work, and having their passports confiscated to stop them taking foreign holidays, and even the threat of prosecution and prison.

Mr Hutton said that he accepted the four main recommendations in the review of child support arrangements by Sir David Henshaw, whose report was also published this afternoon.

These recommendations were, firstly, to focus on tackling child poverty; to encourage more parents to come to their own arrangements without state intervention; tougher enforcement powers; and a new body to replace the failed CSA.

"As we all know, the CSA's problems have persisted (despite attempts at reform)," Mr Hutton told MPs.

"There a backlog of about 300,000 cases, and arrears of about £3 billion in unpaid maintenance with limited prospects of recovery. Levels of customer service, although they have improved recently, have never reached the standards of quality and consistency that families have the right to expect."

Mr Hutton said that it was vital that estranged parents were encouraged to reach an agreement between themselves before a government agency became involved.

At the moment everyone on benefit was automatically compelled to use the Child Support Agency, but he would bring forward legislation to ensure that this would end, he said.

Parents would also be entitled to receive more of their maintenance allowance, rather than having all but £10 of it kept by the CSA. As well as helping to tackle child poverty, this is felt to provide a greater incentive for fathers to pay the cash.

A White Paper on child support will be published later this year, after discussions about other areas of the Henshaw report. He has asked Sir David to prepare a second report on implementing the new system.

But Philip Hammond, the Shadow Work and Pensions Secretary, criticised the reforms for failing to help the 1.5 million families already enmeshed in the CSA system.

"They will not be automatically converted onto the proposed new system and are effectively abandoned," he said.

"Neither has any attempt has been made to address the real root of the CSA’s problems - the inability of the current system to accurately assess how much maintenance an absent parent should pay. Having just poured half-a-billion pounds of tax payer’s money down the drain the Government must be sure it has addressed this key issue before spending any more."

David Laws, the Liberal Democrat work and pensions spokesman, also urged the Government not to write off the maintenance arrears and case backlog.

"The Government must not abandon the hundreds of thousands of families failed by 13 years of CSA incompetence," he said.

"The reforms which are being announced must be judged by one test only - will they get more money through to the children living in broken families? In addition, the Government seems to be talking about a re-badged and shrunken CSA, which may simply fail to collect even the amount of maintenance which is currently paid.

"There is a real risk that, after 13 years of Government policy failure, ministers may be tempted just to wash their hands of many of the most difficult cases."

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