Lawyers were overpaid by more than £50 million for legal aid work last year, auditors have found.
The National Audit Office cited the huge errors as it refused to give the Legal Services Commission's accounts a clean bill of health.
Some £29.5 million of the excess was down to law firms claiming too much for work, while the remaining £21.2 million related to cases where individuals were not eligible for aid.
The spending watchdog stressed that the overpayments had dropped by a third since 2009-10, when they were estimated at £76.5 million.
However, as well as qualifying the books, Auditor General Amyas Morse also highlighted problems with estimates of how much was owed by people receiving legal aid.
Mr Morse said: "While the Legal Services Commission has made considerable progress, it still faces difficulties in reducing the level of error in payments to legal services providers.
"The Commission also needs to make significant improvements to the quality of the data supporting the reported balance of outstanding debt.
"In an environment of spending cuts, the Commission will need to make difficult decisions on the costs and benefits of further work to improve in these areas."
The Legal Services Commission provides legal aid for civil and criminal cases in England and Wales through the Community Legal Service Fund and the Criminal Defence Service.
Legal Services Commission (LSC) chair Sir Bill Callaghan said: "The total estimated overpayments figure has reduced by 34% from 2009/10. We are very grateful to legal aid practitioners who have worked with us to achieve such a significant reduction.
"The estimated overpayments figure now equates to just over 2% of the LSC's total expenditure.
"Overpayments of £7.1 million were recovered from legal aid practitioners during the financial year - this is an increase of over 50% on that achieved in 2009/10.
"The NAO acknowledges that the LSC has made substantial improvements in reducing the amount of overpayments made to legal aid practitioners. This is as a result of the intense programme of financial stewardship work undertaken during the year to address the concerns raised by the NAO.
"The NAO have also limited the scope of their opinion in respect of the valuation of the trade and other receivables balance and the related impairment provision charge, as they have been unable to obtain sufficient audit evidence to support the value of the recorded debt balance.
"To make further improvements that respond to the NAO's recommendations, the LSC will continue to concentrate on strengthening its financial management through its internal financial stewardship programme.
"We are also working on introducing a new IT system for civil representation which will improve claim accuracy and controls."