The government's handling of the Child Support Agency's funding crisis has been condemned as a "shambles".
Critics say the CSA has failed too many children
Out-going Liverpool City Council chief executive Sir David Henshaw has been asked to design a new child support system by the summer.
But Lib Dems said the situation was "absurd" and a "shambles", because the government had acknowledged a year ago that the CSA was in disarray.
The Conservatives criticised ministers for a lack of "leadership".
The CSA - described as "failing" by Tony Blair - spent more on its debt recovery last year than it made back.
Ministers will announce a provisional overhaul of the agency on Thursday, including more powers to search parents' financial details, BBC Radio Five Live chief political correspondent John Pienaar has learned.
A CSA source said: "This is much more than a policy review. We are starting with a blank sheet of paper."
It is understood an internal review did no more than suggest significant extra staff and spending to improve the existing structure.
Under the government plan, CSA investigators will be given powers - comparable to those available to tax inspectors - to obtain credit card and other confidential financial information to help them trace absent parents.
But sources say plans for new sanctions, such as electronic tagging and community service orders to penalise parents who refuse to comply, have been put on hold.
The penalties would require an Act of Parliament and will not be put forward while Sir David's designs a new-look agency.
In the meantime, private debt collection companies will be given the job of pursuing long outstanding cases.
Sources say the CSA will be allocated more staff and resources in the hope of improving its performance with the aid of the new powers.
Conservative shadow work and pensions secretary Philip Hammond said: "Wasting several months on a review that's not even going to be published and then setting up another one which may take up to another year just doesn't look like treating the problem with the urgency it deserves."
Liberal Democrat work and pensions spokesman David Laws said: "I think this is a total and utter shambles.
"I mean we've known for years that the Child Support Agency itself is a shambles but now government policy on the CSA has descended into shambles.
"We were told by the select committee, the cross-party select committee, a year ago that the Child Support Agency was an agency in crisis, that something had to be done, an alternative set of policies.
"We're now a year on and the government is holding more reviews. It's absurd."