The Business and Trade Committee published recommendations for delivering faster and fuller payments to the hundreds of victims, describing efforts to deliver redress to date as an "abject failure".

Chairman Liam Byrne said it was a "national disgrace" that "only £1 in £5 of the budget for compensation has been issued" to sub-postmasters and legally-binding timetables were needed to restore urgency and confidence.

The committee said an independent body should be appointed to lead the process.

Its report stated the Post Office was "not fit for purpose to administer any of the schemes required to make amends".

Money latest: Two big salary groups lose more than they gain

It blamed both victims' lack of confidence in the firm and its "chaotic" leadership.

In reply, the Post Office said it would have "no objection" to the role being relinquished.

The MPs' determinations were partly linked to a separate war of words playing out over conduct at the government-owned company.

The focus on the sub-postmaster victims shifted last week when former Post Office chairman Henry Staunton, sacked by the business secretary in January, told the committee that an investigation believed to have focused on his own conduct was actually concentrated on chief executive Nick Read.

A letter by Mr Staunton to the committee, and released by the MPs, alleged that Mr Read was facing claims of bullying and sexism by a senior member of staff.

He also cast doubts again on Mr Read's assertion, in front of the committee, that he had not threatened to resign.

Mr Staunton claimed Mr Read was particularly unhappy over his salary and dismissed conduct questions against himself as "flimsy".

The committee is expected to consider whether to publish a document, pledged by the Post Office, that is understood to include the details of the allegations against Mr Read.

In its findings against the Post Office on Thursday, the committee expressed a lack of confidence in his leadership.

"Mr Read has supplied misleading evidence to the committee on at least two counts, relating to the Post Office's use of,
first, non-disclosure agreements and, secondly, public relations firms.

"The Post Office is not fit for purpose to administer any of the schemes of redress required to make amends for one of the biggest miscarriages of justice in British history", it noted.

It called on the government to create a "properly resourced" independent intermediary that would offer legal and forensic accounting services to victims to ensure victims are equipped with all the facts and figures they need to secure fair redress and compensation.

Other measures recommended by the report included removing a cap on legal expenses for sub-postmasters and a standardised set of tariffs to help victims better estimate what they are entitled to.

The findings largely follow the issues raised with the committee by Alan Bates, the former sub-postmaster whose experience formed the basis of the TV drama that brought their plight firmly back to public attention.

Between 1999 and 2015, more than 700 were prosecuted after faulty accounting software provided by Fujitsu made it seem like money was missing from their branches.

Mr Byrne said its recommendations were the result of obvious turmoil across the organisation as he questioned whether the government had confidence in Mr Read's leadership.

"The spectacle of the battle between the Post Office chief executive and its former chairman light up a simple truth; that the top of the Post Office is in utter disarray and not fit for purpose to run the payouts to former sub-postmasters.

"Its involvement in running Post Office redress schemes has to end and ministers must create a new, independent body set up that will genuinely help victims through their every stage of their compensation claims."

Business minister Kevin Hollinrake replied: "We agree with him that we need to bring the compensation schemes in house, the GLO (group litigation order) scheme is already being delivered by the Department for Business and Trade, we believe that further compensation will flow from our overturn of convictions, we will be overturning hundreds of convictions through legislation in this House very shortly, as quickly as possible.

"That will provide a flow of hundreds of millions of pounds of compensation to those individuals, that will be done by the Department for Business and Trade."

A Post Office spokesperson said: "Post Office welcomes the direction of this report into speeding redress for one of the worst miscarriages of justice in British history, and we will study its recommendations carefully.

"While £179m has been delivered in redress to victims of this scandal, and settlements reached with 2,700 postmasters, more needs to be done.

"Post Office would have no objection to relinquishing our role in administering redress. Whatever is decided, we will continue to work with government, parliament and the independent advisory board to do everything possible to speed up justice and redress for victims of this terrible scandal."