A record 140 million pounds of fraudulent benefit claims and overpayments were detected between 2006 and 2007, figures released by an independent watchdog on Tuesday showed.
The 26 percent increase on the 2004/5 figure was the fifth successive time record levels of fraud and overpayment had been detected by the Audit Commission in its National Fraud Initiative (NFI) report.
It said the figures were testament to better detection, but called for local authorities to adopt a zero tolerance approach to fraud because it made "both moral and financial sense".
"These are not victimless crimes and some of the fraud found is both blatant and shocking," said Commission Chairman Michael O'Higgins.
The 140 million pounds included 24 million in unnecessary housing benefits, four million in income support and job seeker allowance and 6.4 million in pensions paid after the claimants had died.
In addition, more than 16,000 deceased persons' blue disabled parking badges were cancelled.
One individual received council tax benefit, income support, incapacity benefit and disability living allowance while running a market stall in Lincolnshire and numerous businesses from his home.
In addition, his wife was claiming carer's allowance for looking after him.
The couple owned a convertible Mercedes sports car, enjoyed lavish holidays and had savings in excess of 100,000 pounds.
The NFI figures, which come out every two years, are computer-based, and match information such as housing benefit claims, pensions and social housing records from local councils, the NHS, police authorities, local probation boards and fire and rescue authorities across England.
The Commission refers any anomalies back to the council for further investigation.
"We now expect public bodies to do more to follow up the potential fraud that we have identified," the Commission said in its report.
"They should adopt a zero tolerance policy to fraud."
