This came after the tax authority admitted it would miss its target by £5bn.

HMRC had expected to save £8bn by 2015 from reducing errors and fraud in the administration of tax credits, but it said it now anticipates it will save £3bn.

The revelation comes in a report by the Public Accounts Committee (PAC), due out today, which labels the continuing high levels of fraud and error as “hugely disappointing and extremely poor”.

Committee chairman Margaret Hodge will say the failings show HMRC did “not properly understand which actions are effective in dealing with these issues”.

“They now say they will only save £3bn and in 2011-12 wrote off £1.7bn of tax credit debt as uncollectible,” said Hodge. “In these strained times, the government cannot afford these failures.”

The PAC report found that one in five tax credit payments contained some form of error or fraud that resulted in individuals receiving more money than they were due.

It concluded HMRC should improve its “analysis of data”, in particular checking its administration of tax credits against child benefit data.