Further evidence has emerged of the failure of a council scheme aimed at helping the unemployed in Waltham Forest.

The £9 million Worknet scheme has been riddled with poor performance since its inception, with contractors failing to meet targets and questions over the council's support for projects.

And now the Guardian can reveal charity Widows and Orphans, which won contracts worth £2 million to help the long-term jobless find work between 2010 and 2012, was only eventually paid a fifth of that amount due to under-performance.

Also, town hall auditors who assessed the contract reported in August last year that there were no procedures in place to deal with underperformance by 'delivery partners', except a clause outlining that the contract could be 'terminated on default'.

Furthermore, there is documentary evidence of just two meetings ever taking place to monitor how the money was being spent.

In response to a request under the Freedom of Information Act, the council's director of finance John Turnbull said he was unable to provide evidence of what exactly happened to the money allocated for the Widows & Orphans contract.

But now the authority has said it claimed the £400,000 payment to the charity from the London Development Agency (LDA) and that any other allocated council funds were returned to its general fund.

The Guardian understands some of the work under the agreement was sub-contracted to smaller organisations, including E11 Bid in Leytonstone, and there was a dispute over payments.

Waltham Forest Council has previously apologised for failing to properly manage millions of pounds earmarked for poor neighbourhoods over a number of years.

Nick Tiratsoo, whose research has uncovered financial mis-management at the town hall and has been researching Worknet contracts, said the latest problems shows past problems have not been fully addressed.

He said: "Given that Mr. Turnbull refers to the difficulties of having to reconcile information from both physical and electronic archives, it is likely that at bottom the problem stems from inadequate record keeping - suggesting that routine rules to prevent fraud were once again either ignored or circumvented."

A council spokeswoman said: "Helping local people into work is a priority for the council and we are constantly improving the support we provide. In fact our employment and training programme has been turned around to meet its target of helping to get more local people into work. 

"In 2010 we accessed employment and training funding from what was the London Development Agency (LDA), coupled with council funding this totalled just over £5 million.

"The funding was awarded on an output only basis and therefore we could only access the monies for what the employment and training programmes actually delivered. This is a common arrangement.

"However, even with our best efforts and robust monitoring processes the contractors did not meet their targets.

"As residents would rightly expect, the contractors were not paid in full, only for what they delivered.

"This meant that we did not draw down the full amount of funding from the LDA. The funds from the Council were not spent and were instead returned to our general funds to be invested into resident priorities.

"No funds were mis-spent or lost - they were re-invested into better-performing programmes, exactly as residents would expect."