The scrapping of a new £77 million computer system to handle asylum claims has sparked a war of words between the two main parties.

With the current backlog of cases standing at 66,000, it was hoped that the Immigration and Nationality Directorate (IND) would be able to replace much of the paperwork involved in processing asylum cases with a new streamlined process. In a written answer Jack straw announced the system would now be scrapped.

The IND has now had to take on thousands of extra staff to deal with the rising applications. With asylum raised as a major election issue by the Conservatives, the announcement will be a major embarrassment for the government.

Home Office minister Barbara Roche sought to deflect some of the flak by claiming that the system was ordered by the last Conservative government adding that Ann Widdecombe - who held her post at the time - bore some of the responsibility. She claimed the problems were exasperated by redundancies ordered in the Home Office by the Tories.

Widdecombe, now shadow home secretary, issued a stinging response to Roche.

"You know very well we left you a 40 per cent fall in applications as a result of our 1996 Act which you opposed as racist," she said. "We all know that, as a result of a lunatic decision on the part of Jack Straw, the installation of the IND computer coincided with a major relocation of office with resulting loss of thousands of case files. I fail to see how computers and or the Conservative Party can be blamed for such phenomenal stupidity."

Widdecombe concluded: "The computer is not to blame for the record level of claimants, for your failed voucher system, for your failed dispersal system and for the costs accruing to councils like those in Kent and those in inner London. The government is to blame."

Simon Hughes, the Liberal Democrat Home Affairs spokesman, said: "Many government departments have run into difficulties with implementing IT projects but the Home Office appears to be one of the worst offenders. Ministers are clearly failing to learn the lessons of past failures and it is now important that public scrutiny of future government IT projects is improved."

The announcement marks the latest in a series of problems with technology contracts for the government. Long delays to the opening of the new air traffic control centre at Swanwick, problems with the introduction of the new Passport Agency system and trouble with Inland Revenue systems have all been criticised in the past.