The Times has learnt that, in future, separating parents will be told to sort out their own financial arrangements with the help of national guidelines on appropriate levels of child maintenance. Cash incentives may even be offered to couples for staying away from the new, slimmed-down agency.

The decision to abolish the CSA, which has been plagued with problems since it was set up in 1993, is an admission by the Government that it is unable to deal with the scale of the problem of maintenance payments after family break-up.

Ministers will be accused of letting down some of the most vulnerable families in the country. However, they will argue that, when parents separate, the Government should get involved only as a last resort, not as soon as the break-up happens.

The new agency will be told to “track and enforce” payments in the most complex cases. These include absent fathers who are willing to change job and move house to avoid paying for their children.

It will have extra powers to use credit details to track down absent parents and discover how much money they have.

Greater use will also be made of “deduction of earnings orders” to collect payments. These orders are now issued only in exceptional cases but will become routine, government sources say.

Private debt collectors will also be invited to bid for contracts to enforce payments.

John Hutton, the Work and Pensions Secretary, finally will admit defeat and kill off the failing CSA next month in a Commons statement. He will announce plans for a Bill giving the new agency its powers to enforce debt collection.

Mr Hutton has told colleagues that the CSA was involved too early on when a couple separated, often becoming an excuse to avoid difficult conversations about money.

Hundreds of thousands of mothers on benefits are automatically registered with the CSA when their relationship breaks up, even if they have reached an agreement on maintenance with the former partner. They account for about 67 per cent of the agency’s casework.

Although maintenance payments will still be deducted from benefits under the new child support system, ministers will try to keep these cases away from the new agency unless there is a default.

Officials at the Department for Work and Pensions are examining work at the Department for Constitution Affairs, which is broadening the role of the Court Advisory Service to provide more mediation and conciliation services so that separating parents can agree access arrangements outside court. Similar services are being planned for parents to discuss finance.

The plans are the result of a review conducted by Sir David Henshaw, a former chief executive of Liverpool City Council, who has been paid £900 a day to come up with a replacement.

The Child Support Agency has struggled since its creation 13 years ago and is chasing £2 billion of outstanding debts owed to single parents, although much of it has been written off.

Half of all mothers who apply to the CSA have no contact with the father of their children. In one in five cases, the mother and father have never lived together, and in 15 per cent of cases, the father is also being chased by other mothers through the agency.

However, Mr Hutton has said that too many absent fathers still think that their financial responsibilities end when the relationship with the children’s mother breaks up. Frank Field, a former welfare reform minister, said that he would welcome any move to keep warring parents away from the agency.

“I’m 100 per cent behind that. Most people are grown up and accept their responsililities, and the CSA wastes its time chasing them,” he said.

“The power of the State should only be used against people who fail to meet minimum requirements of good parenting.”

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