A surgeons' leader has resigned from talks in the row over a new system for the training of junior doctors.
MTAS has been widely criticised by doctors
Royal College of Surgeons of England president Bernard Ribeiro said the government was guilty of "a scandalous failure of duty to address this issue".
The new Medical Training Application Service (MTAS) has been blamed for leaving 12,000 doctors without jobs.
Health Minister Lord Hunt said he regretted Mr Ribeiro's resignation but that discussions would continue.
In a letter to review group chairman Professor Neil Douglas, Mr Ribeiro said: "There is still no recognition whatsoever by the Department of Health of the scale of this problem or its profound implications, far less the prospect of an acceptable solution.
"We have all, as taxpayers, rightly invested in training this talented generation of young surgeons. It is my duty to ensure that this is not squandered."
Health Secretary Patricia Hewitt has admitted the government must learn lessons from MTAS.
She survived a Conservative vote of no-confidence on 23 May.
The British Medical Association (BMA) estimates that 12,000 doctors will not get a post as a result of the system which has been plagued by IT and organisational failures.
Junior doctors lost a High Court challenge to the legitimacy of the system, which called for medics to be re-interviewed for posts.
The government had already agreed the forthcoming second round of interviews should use the old CV-based system.
Shadow Health Secretary Andrew Lansley said: "I would urge ministers to listen to what Bernie Ribeiro has to say."
Liberal Democrat health spokesman Norman Lamb said Mr Ribeiro's resignation was "another hammer blow" to the credibility of the government's handling of the situation.
Lord Hunt said: "Only yesterday, the department agreed to set up a working group to discuss issues with training flexibility in surgery.
"We have accepted the recommendations of the review group chaired by Professor Neil Douglas on the amount of additional run-through training programmes needed for this year."