More than 220,000 files relating to payments from the Government's Social Fund, which administers loans and grants, were accidentally destroyed by jobcentre staff in the past year in a paper reduction exercise, it was revealed today.
The National Audit Office (NAO) said missing case papers was a "significant" issue which had been compounded by the loss of so many files.
The comptroller and auditor general, Amyas Morse, said today he had qualified the Social Fund White Paper Account for the seventh consecutive year because of "material levels of error" in discretionary awards, which include budgeting loans, crisis loans and community care grants, and in funeral expense payments.
He has also qualified his opinion on Sure Start maternity grants, for the first time, because of the level of error found in these payments.
The NAO said its best estimate of the total of overpayments in 2009/10 was £106.4 million, around 2.6% of total payments, up from £83.5 million in 2008/09.
The true level of overpayments, though, could be between £82 million to £130 million, the NAO said in a report.
Mr Morse, head of the NAO, said: "The Social Fund provides financial assistance to some of the most vulnerable in society and, of course, judgments associated with making discretionary awards are to some degree subjective. However, the material level of error in these payments has led me to qualify my opinion.
"I have identified a number of new challenges, as well as the existing issues, which the Department must address in the coming year. I will continue to monitor progress made to correct these problems."