New evidence has emerged that Chris Grayling misled the Commons when he denied that a lottery system was used to move probation staff to private firms.
Earlier this month the justice secretary told MPs the allegation was "absolute nonsense".
Labour MP Toby Perkins later told the justice secretary he would raise the issue as a point of order if he did not correct the record.
Grayling wrote back by hand, saying: "You can raise it all you like. Selection was not done by drawing names from a hat."
But new prisons minister Andrew Selous has now admitted the allegations were true and that staff were moved from the probation service into private firms by random lottery.
In a parliamentary answer to shadow justice secretary Sadiq Khan, Selous said allocations were done via an "automatic assignment process" and failing that a "local evidence-based assignment criteria".
But he then admitted that the allocations had been done by lottery where other methods had not worked.
"In those few situations where neither process led to allocation, and only in the case of administrative support staff, then the guidance allowed for agreement on transfer to be reached on the basis of a random assignment process," he wrote.
"This was designed to ensure that staff in similar circumstances had an equal opportunity to be assigned to either of the new organisations."
Despite insisting that the method had only been used in a "few situations", Selous was unable to provide information about how many probation trusts had been forced to use the method.
"We do not hold figures relating to the number of trusts which made use of a random assignment method or how many staff were affected," he said.
But according to Ian Lawrence, general secretary of the parole officers' union Napo, even this admission was misleading.
"All grades of staff were subject to the random assignment process, not just administrators," he told Politics.co.uk.
"While we welcome that the secretary of state now acknowledges that a random assignment process was used on staff it is disappointing that he is, in our opinion, still misleading the House."
The admission raises the prospect that Grayling knowingly lied to the Commons, but even if he was unaware of the lottery system it suggests he is categorically denying allegations before he has the information necesary to do so.
Labour MP Toby Perkins
"The government have been found out," Khan told Politics.co.uk.
"It is disgraceful that the government have sneaked out this answer to my parliamentary question on the last day before summer recess. This shows the lengths ministers are prepared to go to cover up their mistakes and bury their cock ups.
"They’ve finally admitted that probation staff were allocated randomly. They can dress it up how they like but staff have been chosen for the new system by the toss of a coin which was flatly denied by Chris Grayling in the House of Commons.
"This admission was snuck out on the last day before a six-week recess so Chris Grayling can't now be summoned to the Commons to explain and apologise for his previous answer," he added.
"He needs to apologise publicly, to the House of Commons and to those public servants who have been treated with disdain. More worryingly it could mean the wrong sort of staff are now supervising serious and violent offenders as they were chosen at random rather than their specific expertise and experience."
The revelation will increase concerns that the justice secretary is intent on raming through the privatisation programme regardless of the consequences.
An email chain seen by Politics.co.uk earlier this month showed a member of staff at a probation trust informing an employee with 20 years experience that he was selected for one of the new Community Rehabilitation Companies (CRCs) by random lottery.
"Can you please advise me on the criteria of how the PSOs [parole officers] were selected between CRC and NPS [National Probation Trust]," the parole officer wrote.
"I have heard a disturbing rumour that names were placed in a hat, hopefully this was not the case."
The support manager wrote back: "There was a random selection process and employee numbers were used to select between NPS and CRC.
"Employee numbers were drawn out of a hat by a panel of three."
Following Selous' admission, Lawrence called on the justice secretary to apologise to his member for questioning her honesty.
"We call on Chris Grayling to make a public apology to our member for implying that she was lying and to stop being in denial about the omnishambles that he calls probation reforms," he said.
Probation staff have long argued that the privatisation of the service was being conducted in a shambolic way which would put members of the public at risk.
The Ministry of Justice's (MoJ) own internal risk assessment warned of an 80% risk of "an unacceptable drop in operational performance".
Prisons minister Andrew Selous
But Grayling is keen to force through the contracts before 2015 so that they cannot be easily cancelled by Khan if Labour gets into power.
Reports about chaos in probation are starting to seriously concern experts, who fear sex offenders and other potentially dangerous individuals could slip through the cracks of a fragmented system.
Analysts are particularly concerned about the way that separate commercial operations will limit probations staffs' access to information on people who fall under the jurisdiction of a different company.
Whereas probation staff could previously check the IT system for information on a given individual, certain elements of the individual's track will now be blocked off to them because it is under contract with a separate firm.
A damning justice committee report last January raised serious concerns about programme design and definition of outcome, programme costings and transition planning.
Previously, there were 35 local probation trusts handling the risk-assessment and case management of former prisoners, all of them ultimately answerable to the MoJ.
Under the new scheme, the trusts will be replaced by 21 'community rehabilitation companies' (CRCs), which will be responsible for supervising people on community sentences and on release from prison.
Shadow justice secretary Sadiq Khan
The 21 firms will only handle low-and-medium-risk individuals, with the new National Probation Service (NPS) handling high risk cases.
Experts warn this dual system will lead to offenders falling between the cracks, create confusion around accountability and present a higher risk of inefficiency.
The companies will be paid on the basis of how many people do not go on to re-offend, although there are concerns that it is impossible to isolate the causal link to why offenders go on the straight and narrow.
Most prisoners have a mixture of difficulties, such as low literacy levels, mental disorders, broken family connections and employability.
To make the contracts potentially profitable, firms have been handed very large quantities of cases, with large payments being front loaded to cover the additional costs of supervising all prisoners subject to short prison sentences.
The MoJ has failed to provide thorough information about the expected costs of the programme, any anticipated savings, likely reductions in reoffending or estimates about impacts on the future cost of the system.
Khan has demanded that the £6 billion contracts are not signed late in the parliament and that they include a break clause which would allow a new government to walk away from them.