Nearly £2bn of taxpayers' money has been overpaid under Gordon Brown's child and working tax credit schemes, says HM Revenue and Customs.
The official figures show that, of £13.5bn paid out last year, £1.9bn were overpayments benefiting 1.9m claimants.
And 40,000 of those who were overpaid got £5,000 or more while 714,000 were underpaid a total of £464,000.
Ex-social security minister Frank Field said it was hard to defend tax credits if £1 in £6 was "wrongly allocated".
The Labour member added: "Every MP knows the horrors this chaotically-run benefit has brought to all too many families paid the wrong sum at the wrong time and sometimes in the wrong year."
Revenue and customs said the "vast majority" of overpayments occurred because of rising incomes as more people moved into work, the rest were due to computer problems when the system was brought in two years ago.
"Clearly, a key challenge now is to encourage the reporting of such rises to the Revenue more quickly, in order to minimise people's overpayments in the future," the statement said.
The One Parent Families charity said needy claimants were suffering as the department recovered monies that had been overpaid.
Chief executive Nicola Simpson said: "Tax credits have huge potential to deliver real financial gains for families but at the moment the way the system operates is too often leaving lone parents in hardship.
"We believe the system can be made to work for all families but reform is needed soon."