Gordon Brown's tax credits system has been condemned by MPs after it emerged £150 million had been wrongly paid out to West Midland families alone.
The House of Commons Treasury Committee warned: "Official error has been a cause of overpayments in a significant number of cases."
The conclusions were published in a damning report, following last week ' s announcement that £1.8 billion was wrongly paid out across the country in one year.
This included £30.7 million in Birmingham, £8 million in Dudley, and £9.7 million in Sandwell.
In Walsall, overpayments were £8.2 million and in Solihull they came to £4.8 million.
Thousands of West Midland families on low incomes will find themselves faced with demands to repay money they received in error.
However, around half the benefits wrongly paid out are likely to be written off.
Tax credits are the brainchild of Gordon Brown, the Chancellor. They were created to relieve poverty, particularly in families with children.
Unlike traditional benefits, tax credits are designed to boost the incomes of people who are in work.
But critics have claimed they are too complicated, as recipients must fill in detailed forms explaining their financial circumstances - and then inform Customs and Excise whenever their circumstances change.
The select committee report said the system was flawed because it assumed most people's financial circumstances remained the same throughout the year.
However, in reality people on lower incomes were likely to find their circumstances changed month by month, the committee said.
The MPs were also scathing of the Government's failure to work out exactly how much had been wrongly allocated.
The report said: "We are concerned that it is now over two years since the end of the 2003-4 tax year, and yet HM Revenue and Customs is still to establish final levels of claimant error and fraud in tax credits for that year."