Thousands of ill and disabled people have become trapped in a revolving door of medical assessments and appeals at a cost of £80m, with many claimants on their second and third attempts to overturn rulings that remove their benefits.

The government's drive to cut Britain's multibillion-pound welfare bill by moving long-term unemployed people off sickness benefit and into work is at risk of descending into chaos, according to a Channel 4 news investigation.

The work capability assessment programme, which assesses benefit claimants to see whether they are fit for work is "teetering on the brink of collapse" as the system becomes clogged up with appeals.

Ministers introduced more stringent medical tests as part of welfare reforms designed to cut the number of people claiming incapacity benefits, currently at 2.4 million. They say sickness benefits are too often abused as an excuse for being out of work, and have pledged to end what they call the "something for nothing" culture.But the number of appeals by claimants who believe they have been incorrectly assessed as medically able to work has quadrupled in two years, with the projected numbers for 2011-12 expected to reach 240,000.

In one case uncovered by Channel 4, a former barmaid placed on benefits after being diagnosed with musculo-skeletal problems was declared as capable for work, having being given zero points at her work capability assessment medical test.

Her appeal found she was incapable of working for health reasons, having reassessed her "score" as 15 points. As a result her benefit was reinstated but the process took so long that she faced another assessment, which found her fit for work. She is now appealing against that decision.

The logjam in the appeals system has meant that even claimants who lose their appeal against being declared fit for work are not being directed to the jobs market.Because the appeals process can take more than six months, many claimants deemed medically able to work are entitled to make a new claim for sickness benefit.

Jude Hawes, welfare benefits manager at Stoke Citizen's Advice Bureau, tells the film there has been a "huge upsurge" in the numbers of appeals. "There's not a day goes by that people aren't coming through the door with them [appeals]... we've never known anything like that before."

Channel 4 news spoke to 30 Citizen's Advice and legal advice centres in Britain. All reported that they had clients on their second or third appeal. Many described the system as "close to meltdown" and one said the system was "teetering on the brink of collapse."The Channel 4 news film, which airs on Monday says the tribunals service that hears incapacity benefit appeals is overstretched, with some sitting on Saturdays to try to keep on top of demand. The cost of running these tribunals over the last two years is £80m, according to official estimates, with that figure expected to rise.

The crisis has also reduced the number of long-term jobless being referred to Work Programme schemes to prepare them for work to a trickle, putting at risk the financial viability of companies and the specialist charities which are paid to make claimants "job ready."

A Department of Work and Pensions spokesperson said: "Welfare reform will ensure people no longer get written off to a life on benefits. Appeals increase whenever a benefit like ESA is introduced that is why we are working to ensure that problems can be dealt with so they do not unnecessarily proceed to a tribunal. We are also continuously improving the work capability assessment to ensure that it is as fair and effective as possible, bringing in changes recommended by Professor Harrington.

"The Work Programme is ahead in terms of overall referrals. There is a larger than expected number of referrals from some of the more difficult to help groups but with variations in different categories. We are working to make sure there is a good flow of referrals to providers from all the different groups."