Over a billion pounds worth of Housing Benefit expenditure was lost to fraud and official error between April 2011 and March 2012, new figures from the Department for Work and Pensions (DWP) have revealed.

The DWP's statistics show that total overpayments due to fraud and error across the entire benefits system was £3.4 billion, or 2.1% of the total spend of £159.2 billion.

However, relative to spending, the figures show that the total amount lost to fraud alone dropped last year. Even though the amount lost to fraud was £1.2 billion in both 2010/11 and 2011/12, increased spending means that last year saw a 0.1% drop.

A total of £1.4 billion was lost due to claimant error as opposed to fraud, whilst £0.8 billion was overpaid due to official error.

Fraud and error combined saw £230 million overpaid in Jobseeker's Allowance, £310 million in Income Support and £460 million in Pension Credit.

The Department says that a range of measures have been put in place to combat fraudulent activity, such as investigators making greater use the Proceeds of Crime Act against crooks and targeted campaigns focused on suspect areas.

New tougher rules have also come in, with fraudsters facing penalties of up to £2000 without being taken to court.

Further penalties are due to come in soon, including extended loss of benefit for offences, which result in a conviction, of 13 weeks for a first offence, then 26 weeks for a second offence and three years for a third offence; an immediate three year loss of benefits for serious organised benefit fraud or identity fraud; and a new £50 civil penalty in cases where claimants negligently give incorrect information on their claim or fail to report a change in circumstances which results in an overpayment.

The DWP claims that the introduction of Universal Credit in 2013 will simplify the benefits system and greatly reduce opportunities for fraud and error.

Lord Freud, the Parliamentary Under Secretary of State for Work and Pensions, 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."