The Treasury has withdrawn claims by chief secretary Andrew Smith that a National Audit Office report found the private finance initiative offered value for money.
Liberal Democrat spokesman Matthew Taylor complained Mr Smith gave 'completely untrue answers' to Parliament and refused to apologise.
Mr Smith gave a written reply to Liberal Democrat MP David Laws last week, claiming there had been two major reports 'which indicated that PFI is delivering value for money'.
He claimed that one of the reports, PFI and value for money, had found an average saving of 20% .
But the National Audit Office said there was no such report and it had never made an overall analysis of whether PFI projects offered value to taxpayers.
A Treasury spokesman confirmed that while there had been positive reports on individual PFI projects, there had been no general analysis.
The retraction is an embarrassment to the government which has been pushing for more PFI projects.
Extra cash for foot-and-mouth
The government has announced additional funding to support businesses in rural areas hit hardest by foot-and-mouth disease.
The rate relief scheme, which increases the amount of money central government gives to councils in crisis, will still apply in 151 rural areas until the end of the year.
Local government junior minister Dr Alan Whitehead said: 'The extension of the rate relief scheme will help councils to grant 100% rate relief to eligible businesses until the end of the year.'
£45m boost for renewal scheme
Twenty deprived communities will receive funds to appoint a neighbourhood manager to spearhead reforms in local services.
Lord Falconer, minister for housing, planning and regeneration, announced the£45m pathfinders initiative.
The scheme is central to the government's plan for neighbourhood renewal and will allow communities and service providers to work with a manager on long-term problems.