The Government Digital Service (GDS) will take no further direct involvement in the development of the new “enhanced IT” required to roll out the troubled Universal Credit project.

GDS was brought in by the Department of Work and Pensions (DWP) to help put Universal Credit’s IT back on track after substantial failings were revealed and millions of pounds wasted.

But Computer Weekly sources said disagreements over the new approach to IT development, announced yesterday by DWP, has caused GDS to step back from direct involvement, with all new IT work being handled by the DWP.

Secretary of state Iain Duncan Smith was finally forced to confirm that Universal Credit will be delayed beyond its deadline of 2017, with 700,000 benefits claimants having to wait to transfer into the system.

But, to avoid immediately writing off all the £303m spent on IT for the Pathfinder pilot projects, DWP decided to continue to add functionality to the current systems, while also developing what it called “enhanced IT” to roll out the full system.

“As announced in July, the department has been working with the Government Digital Service to explore an enhanced IT system for Universal Credit that uses the latest in technological advances. Ministers confirm that this system has proved viable and the department will further develop this work with a view to rolling it out once testing is complete,” said the DWP announcement yesterday.

In effect, that “twin-track” approach merely delays the likely scrapping of all the IT developed so far for the Pathfinder, according to Computer Weekly sources.

However, insiders claim that GDS – with the backing of Cabinet Office minister Francis Maude – preferred to scrap all the existing work and start again, with rumours that Maude and Duncan Smith disagreed on the way forward. As a result GDS has stepped back from the project.