The Child Support Agency (CSA) is being scrapped, with absent parents facing curfews and the suspension of their passports, MPs have been told.
The measures are intended to reduce child poverty
Work and Pensions Secretary John Hutton said the CSA was not working, had a backlog of 300,000 cases and debts of £3bn with little prospect of recovery.
It will be replaced by a new "smaller, more focused" body as part of a radical reform of the maintenance system.
Senior Tory Phillip Hammond said the move would disappoint 1.5m families.
Mr Hutton told MPs he wanted to "come down like a ton of bricks" on absent parents who "are not discharging their duties legally or morally" in supporting their children.
The reforms would allow parents to keep more of their maintenance allowance before it affects their benefits.
He said the plan was to remove the requirement that all parents with care claiming benefit are treated as applying for child maintenance.
The number of children receiving support would rise from 1.1 million today to 1.75 million, with administrative savings for the taxpayer.
And, accepting the recommendations of a review of child support arrangements by Sir David Henshaw, Mr Hutton said a new organisation would be set up with strengthened enforcement powers.
In his Commons statement, he said the "fundamental flaws" of the system would be addressed and that parents would be encouraged to reach their own maintenance agreements.
He told MPs the CSA had fallen short of expectations "despite the very best efforts of its staff".
"Only a minority of cases handled by the CSA actually receive any maintenance at all," he said.
He said the CSA cost taxpayers around £200m a year but had never delivered satisfactory levels of customer service.
He said the government intended to strengthen the new agency's powers to recover maintenance from repeated non-payers, including letting it impose curfews and suspend passports.
A White Paper will be published later this year setting out the plans in greater detail.
But Mr Hammond, shadow work and pensions secretary, said the announcement would disappoint families "trapped in the shambles of the CSA".
"What they have got is yet another delay for further reports and more consultation. They will feel let down once again," he said.
Liberal Democrats work and pensions spokesman David Laws said the announcement offered "rebranding, further delay and more gimmicks, when what is needed is immediate action".
The One Parent Families organisation welcomed the extra enforcement measures as well as possible changes to benefits.
Chief executive Chris Pond said: "Tough enforcement action has been the missing piece of the jigsaw - there is a culture of non-compliance out there which must be tackled."
However, he added the "big question" concerned existing cases and how long the ones "mired in the mess of the current scheme" would have to wait for change.
And Citizens Advice warned the changes could lead to "widespread confusion", unless parents were informed quickly of their options.
Pressure group Fathers 4 Justice told BBC News the government should support a "legal presumption of contact" allowing parents to see their children after divorce and separation which carried with it "the responsibility to pay for one's own children".
A spokesman said: "This government is trying to reflect its own failing in the family law system and divert it to 'dead beat dads' - the stereotype of guys who walk away and leave their children and... it's just not true."
He also accused the government of "double standards" for planning measures, such as confiscating passports, for fathers who refused to pay but rejecting similar measures against mothers who did not allow fathers see their children.