From The Register:
Selected from a list of several new words added to the gold-standard dictionary this year, omnishambles was chosen by lexicographers at Oxford University Press because it best reflects the mood of the past 12 months. It was first used by the character Malcolm Tucker in series three of the BBC satire The Thick of It and subsequently repeated by the Coalition government’s political opponents.
OED Definition (Stick this up your Webster’s) – OED = Oxford English Dictionary — All the others dictionaries are some dialect of English, for example: Amerricun.
The OED now defines it as:
A situation that has been comprehensively mismanaged, characterised by a string of blunders and miscalculations.