Around £3.4 billion was overpaid due to benefit fraud and error in the past year, an increase of £200 million, official figures have revealed.
The amount paid out due to claimant error increased from £1.3 billion to £1.4 billion, said the Department for Work and Pensions.
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Benefit fraud cost £1.2 billion, the same as the previous year, although as a percentage of total benefit expenditure of £159 billion it fell from 0.8% to 0.7%.
Around £1.1 billion was overpaid due to housing benefit fraud and error, £230 million in jobseeker's allowance payments, £310 million in income support and £460 million on pension credits.
Welfare Reform Minister Lord Freud said: "We are fighting the battle against fraud and making advances, but fraud in the benefits system remains a huge problem.
"We have given our teams more resources and more powers so investigators are now actively tracking fraudsters, using a mixture of the latest technology and old-fashioned detective work.
"From next year, Universal Credit will also make fraud much harder to commit and easier to trace quickly.
"Clearly something is dramatically wrong with the current system when more money is lost because of mistakes by claimants than because of fraud.
"With Universal Credit bringing together six benefits into one, the system will be much easier for individuals to understand, and less vulnerable to human error."