The length of time sick or disabled people are having to wait to find out if they are eligible for benefits is unacceptable, a Work and Pensions Committee report has concluded.
MPs have called for urgent action to improve the current "unacceptable" service provided to Personal Independence Payment (PIP) claimants.
Personal Independence Payment (PIP), the replacement for Disability Living Allowance (DLA), began in April 2013.
The majority of people applying for PIP undergo a face-to-face assessment to determine eligibility, which is carried out by private contractors, Atos Healthcare and Capita Business Services. However some claims are taking six months or more to process.
As a result MPs recommended that penalty clauses in the Department for Work and Pensions' (DWP) contracts with the assessment providers should be invoked where necessary.
The Department of Work and Pensions must clear the existing backlog of PIP claims before reassessment of existing DLA claimants is extended, the report also urged.
All necessary resources be devoted to meeting a 7 day target for processing PIP claims from terminally ill people.
Dame Anne Begg MP, Committee Chair, said: "Many disabled or sick people face waits of 6 months or more for a decision on their PIP eligibility. Even those with terminal illnesses are having to wait far longer than was anticipated. This not only leaves people facing financial difficulties whilst they await a decision, but causes severe stress and uncertainty. It is completely unacceptable."
Begg said it was vital that all disabled people, particularly the terminally ill experienced as little delay and stress in making a claim.
She explained: "Basic failures - from appointments being cancelled without notice to unsatisfactory responses to queries about claims - are happening too often. Claimants, and their MPs, have often been unable to get any information about when a decision will finally be made.
"The Minister acknowledged that the service claimants were receiving from Atos and Capita - and in some cases from DWP itself - was not acceptable. Whilst this recognition is welcome, urgent action is also required. DWP should not only consider invoking penalty clauses in contracts, but must look at its own systems to ensure that the current dire situation is resolved."
Begg concluded:"By the end of last year decisions had been made in fewer than 20% of new claims submitted since April 2013. It is essential that the backlog is cleared before the limited natural reassessment of existing DLA claims is extended any further."
The report also warned that any government efforts to promote a positive image of disabled people could be undermined by the language used by the DWP to communicate benefit statistics.