Tony Blair today told MPs that the failings of the Child Support Agency were "unacceptable" as it emerged that the head of the troubled agency had resigned.

The Prime Minister said that responsibility for chasing parents who refused to pay up might be handed over to the Inland Revenue, after the CSA failed to collect more than half of the money it was due to levy last year.

The agency's record in getting cash to single mothers has been widely criticised.

Alan Johnson, the Work and Pensions Secretary, announced CSA chief executive Doug Smith's resignation as he gave evidence to the House Of Commons Work and Pensions Committee this morning.

Sir Archy Kirkwood, the committee's chairman, was highly critical of the agency's performance, which he said had caused unnecessary suffering to many single parents, particularly because of long-running problems with its computer system.

Mr Johnson told the committee: "Doug has decided that now is the time to stand aside. He believes we have reached a natural breakpoint at which to hand over the reins.

"I would like to publicly thank him for his work in what has been a terribly difficult time."

Thousands of single mothers and children are said to be suffering because fathers are not paying maintenance. Ministers claimed 12 months ago that the problems would be solved by a simpler calculation and a £456 million computer system.

However, a year later the problems have worsened, with nearly one million divorced, separated and absent fathers not paying their way.

Following the announcement of Mr Smith's departure, the Prime Minister promised to look at the possibility of transferring responsibility for chasing child support cases to the Inland Revenue.

Mr Blair and said that the first priority was to put right the organisation's problematic computer system.

But he warned the change, advocated by Liberal Democrat leader Charles Kennedy, was likely to cause "consternation to recipients and the Inland Revenue alike".

Both Tory leader Michael Howard and Mr Kennedy swiftly took up the issue at Commons question time, with the Liberal Democrat leader demanding the scrapping of the CSA.

Mr Howard demanded: "The chief executive of the CSA has just resigned. The agency is in crisis. What are you going to do to get a grip on the problem and help some of the poorest families in the country, who aren't getting the money they are entitled to?"

Mr Blair replied: "The first thing is obviously to ensure that the information technology system that has caused so many problems ... is sorted out.

"The second, and perhaps most important problem, is that there are still a million cases being dealt with under the old system - the system we inherited.

"Over time, there will be a migration into the new system that we introduced. That new system, of course, is far more simple. So, it's important that we manage to migrate as many as possible from the old system to the new."

Less than half the money due in the first year of the new system has been collected, according to One Parent, a pressure group.

Today Steve Webb, the Liberal Democrat work and pensions spokeman, said on BBC Radio 4's Today programme: "We all want it to work but our judgment, the Liberal Democrat view, is that the CSA is a bit like a tyre that has been patched time and time again and at some point you say it is just not remediable.

"The whole agency needs to go, and an organisation like the Inland Revenue shoud take over this whole thing, because the Revenue is actually quite good at getting money off people.

"The CSA is useless, actually. People know how to work the system. Even when the computer works and they come up with the right number, the CSA then fail to find people."

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