The Secretary of State has been accused of "acting disgracefully" over a delay to a judicial review into the failure to implement the victims' pension as planned.
Applications for the pension had been due to open in May but a dispute between the DUP and Sinn Fein over who should be eligible, and over who should pay for the scheme, saw plans halted.
Now the UK Government has appointed a barrister to argue that a legal action by Jennifer McNern, who lost both her legs in the IRA Abercorn bomb attack in 1972, should be set aside to allow a lesser judicial review to proceed in its place.
Former Secretary of State Lord Hain called the latest delay a "savage denial of rights" and "a disgraceful display of political intransigence".
Speaking in the House of Lords last night he said Brandon Lewis and Northern Ireland Office officials should be "thoroughly ashamed of themselves" for continuing to deny victims their legal right.
"It is now 40 days since the scheme should have been opened for applications and because of a disgraceful display of political intransigence within the Executive Office some of the most vulnerable men and women in Northern Ireland and beyond have been denied access to it," said Lord Hain.
"When I last spoke about this at the beginning of June I said that a severely injured victim, maimed for life in a terrorist atrocity decades ago, had been forced to put the devolved administration on notice of judicial action to force it to honour its moral and legal obligations.
"Jennifer McNern was only 21 years old when her legs were blown off in a no-warning IRA bombing in 1972.
"I have met Jennifer and I can tell you that she is a courageous and determined woman.
"She had no option but to go to the High Court to seek legal redress from the Executive Office, which has so blatantly defied the law. The UK Government responded by instructing a Queen's Council to argue before a High Court judge that Jennifer's judicial review be set aside to allow another, arguably weaker judicial review to proceed in its place.
"That was and is disgusting behaviour by the Secretary of State. I say to Brandon Lewis and his Northern Ireland Office officials: you should be thoroughly ashamed of yourselves - the lot of you.
"Jennifer's case will proceed, though it cannot be heard until August. In this Parliament we do not have the power to hold the Stormont Executive Office to account for its shocking - and illegal - refusal to implement the law."
A UK Government spokesperson rejected the criticism, saying: "The Secretary of State for Northern Ireland is working tirelessly to see a resolution on departmental designation by the Executive Office, which is the next vital step towards this scheme opening.
"Victims have waited too long for these payments and the Government is extremely disappointed by the lack of progress.
"We do not recognise this characterisation by Peter Hain. There was no attempt by the Secretary of State in any of the arguments made in court to prevent the court from considering the matters raised by the judicial reviews."
It has also emerged that the Executive Office is facing three legal challenges over the failure to implement the pension.
Appearing before the Executive Office scrutiny committee on Wednesday, civil servant Gareth Johnston said the department had been emphasising through its legal counsel that "active efforts" were being made to try and resolve funding at both an official and ministerial level.
"The timetable they're looking towards is hearings in the week of August 17," he said.
Asked by UUP MLA Doug Beattie how many legal cases the Executive Office was dealing with, he said: "There have been a couple of preliminary hearings the court has held so far in focusing on two cases - but a third one will be joining."