Public Services and the Third Sector: Rhetoric and Reality says government claims that third sector organisations provide a distinctive service are based on "hypothetical or anecdotal" evidence.
"The evidence is simply not there to judge conclusively whether there are shared characteristics across all third sector organisations that might make them particularly suited to the provision of public services," says the Public Administration Select Committee.
The report also says that government rhetoric about the capacity of the sector to bring change is exaggerated, given that the third sector delivers services worth only 2 per cent of total public service spending.
Tony Wright MP, chair of the committee, said there was not enough information about the Government's policy of commissioning services from the sector.
"We've been told for some time that the ideology of public service delivery is that there is no ideology - that what matters is what works," he said. "So it's strange that nobody seems to know what works.
"But public services must be provided by whoever will deliver the best outcomes for service users. Sometimes, that will be an organisation from the third sector."
The report sparked disagreement from Turning Point, one third sector service provider that gave evidence to the committee.
"We have innovative programmes that show we are delivering public services that the public actually want to use," said Lord Victor Adebowale, chief executive of Turning Point. "There is compelling evidence to back up claims that the sector is delivering. The proof of the pudding is in the eating, and we've got some good dishes."
Graham Beech, director of marketing and communications at Rainer Crime Concern, said charities had the ability to provide high-quality public services but needed more opportunities to show it.
"There's evidence that the sector can reach communities and people who wouldn't otherwise benefit from services," he said.
The report also says the Government should use "intelligent commissioning" to get the best from the sector. This means focusing on improved results rather than cost savings, offering smaller-scale contracts and support with bidding for contracts, and ending "perverse practices" such as clawing back surpluses from charities and offering short-term contracts.