Jobcentres should be split up, with their employment arms forced to compete against private sector and voluntary providers and the remaining services rebranded as Citizen Support, a think-tank has recommended.
Under the plan, the employment services arm would be mutualised, while the remaining part of Jobcentre Plus would be expanded and renamed to reduce the "stigma" attached to it.
The right-of-centre Policy Exchange said just over a third (36%) of people using jobcentres find sustained work, with many finding themselves in and out of employment largely due to having barriers to work which are not fully dealt with.
The report said t he Government's welfare reforms have improved matters, but there is still too much duplication and inefficiency in the system.
The think-tank said private companies and charities should compete with government agencies to help people into work, with p ersonal budgets for jobseekers to give them greater control over allocation of funding to employment support providers.
Citizen Support would act as a central hub for government services, enabling advisers to identify an individual's specific barriers to work and suggest providers that could help meet their needs.
The adviser would also show the success rate of each provider using comparison data to help the jobseeker make a more informed decision.
The report's author, Guy Miscampbell, said: "The way public services are currently structured means that often a jobseeker ends up being passed from pillar to post. This is confusing for the individual, creates barriers to help them into work and is expensive.
"Services have improved enormously, but there is still a lot more to do.
"What is needed is a radical overhaul of the system which puts the needs of the jobseeker first. The very word jobcentre comes with a stigma.
"Instead of attaching labels to people who are not in work we should reform the system to make it as easy as possible for individuals, who often have multiple problems, to work with an organisation that is best suited to helping them into work."
The Department for Work and Pensions said Jobcentre Plus conducts 98,000 adviser interviews, processes 18,000 working-age benefit claims and answers 197,100 calls in contact centres every working day.
A spokeswoman said: "An important milestone has been reached in our country's recovery. With one of the highest employment rates ever and more people in work than ever before, it's clear that the Government's long-term economic plan to help businesses create jobs and get people working again is the right one.
"However, we know there is always more to do, which is why our Jobcentre staff work hard every day to help people off benefits and into work.
"And our Work Programme - which is run by private providers who are paid by results - is helping more people than any programme before, with more than half a million people having started a job and 300,000 moved into lasting work."
The 36% figure was based on research from 2011, and the labour market has changed substantially since then, the department added.