The private contractor Atos, which administers the government's work capability assessments, has come under sustained criticism from MPs as they told stories of constituents who had died shortly after being ruled fit for work by the firm.

During a powerful Commons debate that united politicians from all parties, MPs gave emotional accounts of how very sick individuals had been incorrectly assessed and told to return to work. Some of them later died, they said, and MPs told of others who had killed themselves or become suicidal following such decisions.

Labour MP Michael Meacher described the death of a young man with epilepsy shortly after he was classified fit for work and saw his benefit cut by £70 a week.

"He became agitated and depressed and lost weight, fearing that he could not pay his rent or buy food. Three months later, he had a major seizure that killed him," Meacher said. "A month after he died, the DWP [Department of Work and Pensions] rang his parents to say that it had made a mistake and his benefit was being restored."

The government's own figures revealed that 1,300 people had died after being told they should start preparing to go back to work, and another 2,200 had died before their assessment was complete, he said.

"Is it reasonable to pressurise seriously disabled persons into work so ruthlessly when there are 2.5 million unemployed and when, on average, eight persons chase every vacancy, unless they are provided with the active and extensive support they obviously need to get and hold down work, which is certainly not the case currently?" Meacher asked.

He reminded MPs that Atos was paid £110m a year to carry out the assessments for the DWP but and a further £60m of public money was being spent on administering appeals, because so many decisions were contested. The British Medical Association had described the assessments as "not fit for purpose", Meacher told the Commons.

Labour MP Steve Rotheram described a case he had heard about from a constituent, Janine, in Liverpool. "Her dad was thrown off sickness benefit in November after an Atos work capability assessment and was declared fit for work despite suffering from chronic obstructive pulmonary disease. Six weeks later, on Christmas Day, Janine's father died," he said.

Conservative MP Heather Wheeler asked whether Atos reviewed the cases of those people who dropped "down dead within three months of being told they are fit for work". "At what point do we say that this isn't working?" she asked.

Caroline Lucas, the Green party MP, condemned the "humiliating and demeaning" process which "makes sick people even sicker".

Labour's Pamela Nash said: "Nothing has shocked me more as an MP … than the sheer scale of anxiety and hardship caused by the flawed work capability assessments." She described seeing constituents developing mental health problems as a result of the stress the process caused.

Madeleine Moon, another Labour MP, said her constituency phones were often "clogged with crying people" distressed by the process. She described a constituent who was driven to attempt suicide by her experience of being assessed.

Conservative MP Jeremy Lefroy said Atos should be placed in the "last chance saloon" by the government.There was concern from Labour's Sheila Gilmour that 43% of people who were found fit for work were not working the following year and were not receiving benefits. "Where are they?" she asked.

Helen Goodman, a Labour MP, told of a district nurse who broke her back at work who was then found fit for work and a man who had been completely blind for 16 years and was forced to give up work but was told he must go back to work after an assessment.

Labour's Iain Wright described the distress of a female constituent with Crohn's disease who was told she could wear a nappy to work. "The government is treating my constituents like dirt," he said.

There was unease about the language that was increasingly used to describe benefit claimants, and one MP said claimants were "made to feel like they are on trial for benefit fraud at their assessments".

Most speakers agreed that it was sensible to have a system that made sure that those capable of work were helped into work. Stephen Timms, the shadow minister of state for employment, said: "The architecture of employment and support allowance is sound. The assessment system, however, is clearly not up to the load it is being asked to bear." The current system needed "fast and fundamental reform".

Mark Hoban, the employment minister, said considerable progress had been made in improving a process that was introduced by Labour. He said it was unhelpful to "demonise" the system with "adverse media coverage".

An Atos Healthcare spokeswoman said: "We know that this can be a difficult process for people and we do all we can to make sure the service we provide is as professional and compassionate as possible.

"[Our workers] strictly follow the guidelines given to them by the government when conducting assessments and make no decisions on a person's eligibility for benefits.

"We have worked with the department on improving the part of the process we carry out and continually ask for feedback from the department and those claiming benefit."