The voice-risk analyser equipment detects changes in voices
The government is to provide funding for 15 more councils to get lie detectors to catch out benefit cheats, who cost taxpayers up to £400m a year.
Trials of the system, which analyses speech patterns, have saved hundreds of thousands of pounds, say councils.
Seven councils have already tested the technology, which is already used by the insurance industry to combat fraud.
But critics say genuine claimants may be put off applying for help for fear of being wrongly labelled a fraudster.
The voice-risk analyser equipment detects changes in the sound of the claimant's voice, which could indicate they are not telling the truth about their circumstances.
Benefits staff are then able to ask for further evidence to support any suspicious claims.
Harrow Council was one of the seven areas already given cash to introduce the technology.
A year on, it says it has saved £420,000, partly because a third of people who received a phone call admitted their personal circumstances had changed and they may not be eligible to receive benefit anymore.
More than 90% of people claiming benefits were honest, but "often people changed their stories part way through the conversation" said Harrow councillor Paul Osborn.
He claimed some benefit claimants realised their answers were not adding up and did not want to get prosecuted for fraud.
Fraudsters steal £400m in benefits each year in Britain.
The decision to make the technology available to 15 more areas follows what the government believes is success in the initial trials.
Councils will have to compete against one another to receive the equipment.
The system works by having an operator sit in front of a computer screen as he or she makes phone calls to claimants.
The important thing to understand is it flags up a risk, it doesn't prove the fraud in itself
Department for Work and Pensions
The operator asks set questions, and the screen flashes red if the software detects a change in the modulation of the voice, which could indicate the claimant is not telling the truth.
At the same time, the operator makes a note of whether there is any hesitation, repetition or nervousness.
The government claims that if it was installed everywhere the Voice Recognition Analysis equipment could save up to £30m a year in housing benefit claims alone.
But critics are concerned vulnerable claimants will be put off asking for money to which they are entitled, for fear of being wrongly labelled a fraudster.
Richard Exell, of the TUC, said: "Someone who is a practised liar, who's deliberately defrauding the system, may very well be able to beat equipment like this, whereas someone who is scrupulously honest may actually be scared off claiming a benefit they are entitled to."
The TUC's fears were echoed by left-wing Labour MP John McDonnell (Hayes and Harlington), and the Child Poverty Action Group.
Mr McDonnell said: "No-one condones fraud but people have a right to claim benefits that they have paid their taxes to fund without being treated like criminals.
"Just like over the 10p tax issue, the government is attacking the most vulnerable.
"Why aren't we applying lie detector technology to those who are really ripping off the system - the City elite who cost the Treasury up to £150bn in tax avoidance?"
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A spokesman for the Child Poverty Action Group said: "It is deeply worrying that the Department for Work and Pensions does not appear to have made any evaluation of the pilots and has made the decision on what seems to be anecdotal evidence.
"We need to see a proper evaluation before more vulnerable claimants are experimented on."
But the government said those doing nothing wrong had nothing to fear and that the lie detector evidence was just the start of fraud investigations.
James Plaskitt, anti-fraud minister at the Department for Work and Pensions, said: "The important thing to understand is it flags up a risk, it doesn't prove the fraud in itself. It's an important additional bit of tooling."
The lie detectors are expected to be rolled out nationally, with the government claiming they will save taxpayers tens of millions of pounds a year.