Most people who are disabled or sick applying for Personal Independence Payment undergo a face-to-face assessment to determine eligibility, which is carried out by the private contractors, but the committee said some claims were taking six months or more to process.
Some of the affected claimants are people with terminal illnesses.
The MPs said the backlog of claims should be cleared and the average time taken to process new cases reduced to the expected 74 days, and seven days for terminally ill people.Claimants hit by delays were facing stress and uncertainty, said the committee.
Disabled and sick people are having to wait six months or more to find out if they are eligible for benefit, which MPs have attacked as "unacceptable."
The delays were criticised by the Work and Pensions Committee, which called on the Government to take urgent action to clear a backlog of cases.
The MPs also urged the Department for Work and Pensions (DWP) to invoke penalty clauses with assessment providers Atos Healthcare and Capital Business Services.
New claims for Personal Independence Payment (PIP), the replacement for Disability Living Allowance (DLA) as the benefit to help towards the extra costs of disability for people of working age, began in April 2013.
The Department for Work and Pensions has defended the new Personal Independence Payment, after a report suggested claimants were having to wait longer for their claims to be processed.
Margaret Hodge said the claims would cost almost three and half times more to process than the previous Disability Living Allowance system, and claimed the delays would cause "real distress" for vulnerable people.
However, the DWP defended the scheme claiming the previous system was "broken".
Delays in processing claims under the new Personal Independence Payment have reduced the amount the Government expected to save by £140 million, the National Audit Office said.
The backlog in cases have cut expected savings over the course of this Parliament, with the DWP now forecast to save £640 million a year by 2015, rather than its orginial prediction of £780 million.
Each new PIP claim - worth between £21 and £134 a week to disabled claimants - costs an average £182 to administer, compared to £49 under DLA, the report said.
However, the DWP said it still expects to achieve annual savings of £3 billion by 2018/19, with 3.6 million claims assessed by 2018.
Delays in processing the Government's new Personal Independence Payment (PIP) will cause "real distress for vulnerable claimants", the Public Accounts Committee chair has said.
Margaret Hodge said claimants were left facing "uncertainty and potential financial difficulties", after the National Audit service found claimants were having to wait longer for claims to be processed than under the previous system.
"I was shocked to learn that, not only will Personal Independence Payment claims cost almost three and half times more to administer than Disability Living Allowance, they also take double the amount of time to process," the Labour MP said.
"The current backlog and delays in processing claims are simply unacceptable and will no doubt cause real distress for vulnerable claimants."
Benefit claimants face "long and uncertain delays" as a consequence of the slow processing of claims under the Government's new Personal Independence Payment, the National Audit Office said.
The head of the NAO Amyas Morse claimed the Department of Work and Pensions did not allow enough time to see if the assessment process could handle a large number of claims.
Mr Morse added:
Disabled people are facing "distress and financial difficulties" as a result of the slow processing of claims under a new Government benefit scheme, a spending watchdog has found.
The National Audit Office found that claimants for the new Personal Independence Payment, which will replace Disability Living Allowance, were waiting an average 107 days for a decision on their cases, rather than the predicted processing times of 74 days.
Terminally ill patients were found to be waiting for 28 days instead of 10 days.
A backlog of 92,000 cases had built up with private contractors Atos and Capita within six months of the introduction of PIPs in some areas of the north of England.
As major changes to disability benefits begin to come into force in the North of England today, the latest Index poll conducted by ComRes for ITV News reveals that the British public is deeply divided over the benefit reforms:
- Two in five (41%) of the British public support the changes
- one in three (36%) oppose them
- one in four (23%) are undecided
The public think the changes being made to welfare system are necessary to make work pay (51%) but are divided over whether or not they are fair:
- 42% feel that that the changes made to the welfare system by the Coalition are unfair
- 40% disagree
- 18% do not know whether changes are unfair or not.
The minister for disabled people and Tory MP for Wirral West, Esther McVey, said changes to the benefit system are about "understanding disability in the 21st century" and adapting a system which will work better in the future.
The MP said the new scheme is not aimed at saving money.