Specialist responses from the volunteering sector "won't happen" if the government does not change its course, a homeless charity chief has said.
Leslie Morphy, chief executive of homelessness charity Crisis, told politics.co.uk she feared small-scale charities would continue to rely on voluntary sources for up to half their funding.
The government hopes 'prime contractors', mostly private sector companies, will subcontract to the kinds of small- and medium-sized community, voluntary and social enterprise organisations championed by David Cameron's 'big society' agenda.
"The sums of money which prime contractors are suggesting will be available to deliver people into work are at best half what it will eventually cost us to deliver," Ms Morphy explained.
Part of the problem is a reluctance among the prime contractors to communicate their needs to localised specialists, like Crisis.
"Frankly they're not providing us with the basic information - what volumes they expect us to deliver against what price," Ms Morphy added.
She told the prime minister at his welfare reform launch in east London on Thursday: "They're just not giving us the information... that allows us to make a commercial decision.
"What worries me is that will result in the specialist response that will make a difference won't happen because the contracting process is flawed."
Mr Cameron responded by explaining that he supported "the small enterprising charity that has the personal ability and attention to deal with difference cases" before backing the 'payment by results' approach.
He said it would be worth spending up to £15,000 on a person to get them into work "because of the money you're going to save down the line".
Work and pensions secretary Iain Duncan Smith added that prime contractors will have to assume most of the risk because "many voluntary sector organisations are simply not set up to take the risk element".
He pressed that prime contractors had been told: "You will not get any further if your contracts do not include absolutely clear links with the voluntary sector and subcontracts that... don't pass the risk on, but allow them to take an element share of the rewards that come".
Mr Cameron added that the Big Society bank would help provide funding to small- and medium-sized social enterprises enabling them to take greater risks.
Ms Morphy said afterwards she was not convinced that the new approach would work, however, insisting it was "effectively exactly the same" as the flexible new deal pioneered by the New Labour government.
"I think they really believe this is a different, new model of contracting," she added. "I just don't think they understand in practice how it's operating."