Labour wants to work with the Government to turn around the universal credit reforms and "hopes" to run at the next general election pledging to keep the new system.
In a speech in North London, shadow work and pensions secretary Liam Byrne levelled personal attacks at Iain Duncan Smith, claiming there "seems to be something very wrong in the mind" of the the Work and Pensions Secretary because of his failure to deliver reforms.
He said he would be writing to Mr Duncan Smith urging him to convene cross party talks with civil servants to save the flagship universal credit reforms from becoming a "sinking ship".
Universal credit is intended to roll six current benefits - including jobseeker's allowance, working tax credits and housing benefit - into a single monthly payment.
It is currently being piloted.
Asked if he did want to save the policy, Mr Byrne said: "I hope so, I sincerely hope so, but right now we have had so much dissembling we don't know what is going on.
"Last year Mr Duncan Smith said there would be a million people on universal credit.
"I think it was also said new applications for benefits by this October would be for universal credit.
"Both of those targets have disappeared but no new targets have come back into their place.
"Who on earth knows what's going on?
"If we're going to get things straight, the first step is to put the cards on the table, tell us what is going wrong and perhaps we can work together."
Despite his personal attacks, Mr Byrne insisted he was not questioning Mr Duncan Smith's "sanity" and felt the former Conservative leader was a "good man" who had pushed the Conservatives towards genuine discussion about poverty - but that the reform plans had failed.
He said: "They have shown they can do the easy things like cut working people's tax credits or help for disabled people but what they have also shown is they can't do the difficult stuff - to put in place programmes that bring down unemployment and help make sure the right people get the right benefits... we have got some big delivery problems in the way."
In his speech to mentoring charity Chance UK, the former Treasury minister said the failure to deliver at the Department for Work and Pensions would cost the taxpayer £1.4 billion during the course of the current five year Parliament.
Mr Byrne said the biggest cost would come from extra job seeker allowance claims because of low take-up of the youth contract - insisting that, on current trends, targets would be missed by 92%, costing £457 million.
Labour said the figure was reached by estimating almost 148,000 more young people would be on the dole in April 2015 than if all the youth contract wage incentives had been taken up.
Mr Byrne also claimed implementing universal credit would cost an extra £300 million, failures by Atos would cost £287 million, the work programme was costing £140 million and putting in place the bedroom tax would cost £102.5 million.
The former chief secretary estimated £140 million was wasted between 2010 and 2012 because of rising fraud and error.
And the shadow minister pledged Labour would be laying out its own plans for reform "by tackling the long-term drivers of spending", insisting Labour's plans would be based on the twin principles of the "care ethic" and the "work ethic".
As well as cross party talks on universal credit, Mr Byrne said Atos should be given a short deadline of just weeks to stop failing in delivery of work capability assessments or face being stripped of its Government contract.
He repeated Labour's call for a bankers' bonus tax to fund a jobs guarantee for young people.
Mr Duncan Smith's spokeswoman said Mr Byrne's figures were "nonsense".
She said: "This is a last-ditch attempt by Liam Byrne to keep his job in the shadow cabinet.
"His talk of wasted money is frankly laughable when you consider Labour have voted against £83 billion-worth of savings to the welfare budget.
"Labour is panicking - after a summer of discontent, here is yet another disastrous speech, void of any ideas.
"Same old Labour is in the wrong place on welfare.
"They want people on benefits to make more money than the average hard-working family earns.
"They want unlimited amounts of benefits to be a basic human right.
"Labour have even gone as far as to ban the word 'welfare' in the hopes we all forget they are the Welfare Party.
"The taxpayer supports what we're doing on welfare.
"Ed Miliband has got it wrong yet again."