The charity that runs the National Citizen Service is being sued by its largest provider for at least £20m.
The Challenge, which in August lost a contract believed to be worth more than £60m a year to deliver the youth scheme, has filed High Court documents against the National Citizen Service Trust for breach of contract in seven regions.
It has also launched a separate claim of defamation.
The legal claims bring to a head a long-running and acrimonious dispute, which was laid bare in a letter from Bill Ronald, chair of The Challenge, to Nicky Morgan, the culture secretary, last week.
Ronald's letter accused the trust of "mismanagement and failure of leadership" and claimed it made defamatory comments about The Challenge in a press release.
He urged Morgan to intervene to prevent the collapse of The Challenge, which employs 430 staff.
"The continued poor behaviour of the trust's leadership now not only endangers the future of The Challenge, but threatens its network of NCS delivery partners, a great number of which are small local charities across England," the letter said.
It added that Ronald first contacted the DCMS in July with "urgent concerns regarding the mismanagement of the NCS programme by the trust".
Ronald then listed seven new concerns about the NCS Trust.
They included that it had not paid £4m of contractual payments, had withdrawn provisionally awarded future contracts worth £299m, "resulting in extensive redundancies", and had made "defamatory remarks scapegoating The Challenge and requiring legal action".
He added: "This follows a catalogue of previous failure at the trust that has caused substantial damage to The Challenge and to the young people it supports, including (but by no means limited to) the implementation of an unfit-for-purpose IT system, which has resulted in over 10,000 young people missing out on NCS places, over £5.5m of wasted public money, and exposed young people to potentially life-threatening safety risks through a flawed medical assessment process."
The letter also referred to the "abrupt" resignation of Michael Lynas, chief executive of the trust, who announced last month that he would step down next year.
Oliver Lee, chief executive of The Challenge, issued a statement today saying: "The Challenge has for several months been engaged with the trust and DCMS to attempt to resolve serious issues arising from the mismanagement of certain aspects of the NCS programme by the trust in 2019."
Lee added that The Challenge "remains committed to delivering our remaining responsibilities on the NCS 2019 autumn programme and to supporting future NCS providers through a smooth handover process".
A trust spokeswoman said in a statement: "It is unfortunate The Challenge feels it needs to make these allegations in such a public way".
"We reject the allegations and we are challenging the legal claim."
The spokeswoman dismissed claims by the Guido Fawkes website, which published Ronald’s letter, that NCS was on the verge of collapse as "utter nonsense".
She added: "NCS has recently recommissioned its providers and will be taking tens of thousands of young people on the programme next summer without The Challenge as a partner after we decided not to contract with it again."
Asked about suggestions by Guido Fawkes that Lynas "jumped before he was pushed", she said: "Michael Lynas will remain in post until spring/summer 2020 while a new leader is recruited.
"After his successor is appointed, he will continue to champion NCS as the NCS Trust’s founder and patron."
A DCMS spokeswoman said: "We have received a complaint from an NCS provider about the NCS Trust.
"In line with standard complaint procedures, we will be investigating the matters raised and will address any findings as appropriate."