Security firm G4S has apologised and offered to repay more than £24m after it overcharged taxpayers for the electronic tagging of offenders.
The company admitted its part in the scandal - currently being investigated by the Serious Fraud Office - which included bills for monitoring criminals who had died.
But it insisted an independent review it commissioned had "not identified any evidence of dishonesty or criminal conduct by any employee".
G4S refused to co-operate with a forensic audit of its work - and that of fellow contractor Serco - which a public spending watchdog revealed had already cost the Ministry of Justice (MoJ) more than £2m.
The firm said it now accepted it had "wrongly considered itself to be contractually entitled to bill for monitoring services when equipment had not been fitted or after it had been removed".
The admission was branded "staggering" by Labour MP Keith Vaz, chairman of the home affairs select committee.
Mr Vaz has called for all G4S contracts with the Government to be reviewed "immediately", and for the firm to be "banned from bidding for any more".
"Contracts of this kind need to be conducted in good faith and represent value for money," he said.
G4S said: "This billing practice ... was not consistent with the contract or G4S's values and the company has apologised to the Ministry of Justice and issued credit notes totalling £23.3m for amounts incorrectly billed between 2005 and May 2013.
"A further credit note of £0.8 million will be issued for billings for the period from June 2013 to date."
The MoJ would not be drawn on whether it would accept the G4S offer. A spokesman said: "The Secretary of State has been clear: we are determined to secure a refund for the taxpayer."
The MoJ said it would not comment further until a criminal investigation was completed.
G4S said it was ready for further negotiations with the MoJ if the audit concluded that it had overcharged by more than the sum offered.
The company said there was no evidence that its errors extended to any of its other Government contracts. It has faced repeated criticism of its performance, not least over security for the 2012 Olympics.
Labour MP Keith Vaz, chairman of the Home Affairs Select Committee, said: "The admission of G4S today is staggering.
"The company refused to co-operate with the Government, which led to the referral to the SFO, and that should have rung alarm bells. It represents serious corporate failure.
"Contracts of this kind need to be conducted in good faith and represent value for money. Every G4S contract with the Government needs to be reviewed immediately, and they should be banned from bidding for any more."
An audit by big four accountancy firm PricewaterhouseCoopers (PwC), launched in May, revealed that overcharging began at least as far back as the start of the current contracts in 2005 - but could have dated as far back as the previous contracts in 1999.
Auditors discovered the firms had charged the Government for tagging offenders who were back in prison, had had their tags removed, had left the country or had never been tagged in the first place but had been returned to court.
The Government has handed over material from the PwC audit of Serco to the Serious Fraud Office while G4S was referred to it after declining to take part in the audit, which included looking at email trails between top executives.
The revelations sparked a Government-wide review of all contracts held by Serco and G4S. G4S UK and Ireland chief executive Richard Morris will face questions from MPs over the scandal tomorrow when he appears before the Commons public accounts committee.
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