Evidence has emerged that suggests some Eastern European workers are exploiting loopholes in the tax credit system to make false claims.
The tax credit system is designed to help low income workers
An independent audit by a Glasgow-based employment agency discovered 11 false claims to migrant workers in the city alone totalled £50,000.
HM Revenue and Customs said it had no evidence of fraud from migrant workers.
Glasgow South West MP Ian Davidson said the UK Government had promised to investigate the matter.
The Labour MP, who sits on Westminster's Public Accounts Select Committee, said: "What I have instituted is an investigation by the minister's office.
"I have got details of some of the cases. I have passed these on and I have also tabled a number of questions trying to identify the scale of the difficulty.
"My understanding is that this had not previously been drawn to their attention but they are vigorously pursuing it now."
The tax credit system can top up low incomes by more than £10,000 a year.
It was introduced to encourage the unemployed to take jobs where the wages on offer were little more than their social security benefits.
Workers from the Eastern European countries which joined the EU in 2004 are entitled to claim tax credits.
There have been concerns about false claims, with loopholes in the system meaning that weekly income top-ups can still be paid after claimants have stopped working.
There are also allegations of other frauds involving faking the date of starting work to claim back dated payouts.
George Elliot, who runs an employment agency in Glasgow which specialises in recruiting workers from Eastern Europe, said he is convinced the system is being milked by an unscrupulous minority.
He said the payouts have been made without checks and that they continue to be made even although claimants have stopped working.
Mr Elliot added: "We don't know how widespread it is, but we know it is happening all over the west of Scotland.
"When we did our own audit, we found 11 or 12 cases and the amounts claimed and given by the government totalled about £50,000, all of which we knew shouldn't have been paid."
Barbara Turner, a payroll supervisor with the agency, said it was easy to check whether workers were eligible.
"One of our controllers asked me how a working tax credit cheque could have been cashed for one of our workers when he didn't have a bank account.
"I asked who the person was, checked up and found that the person wasn't working. I got onto the government departments and asked them why they weren't checking with employers - I got no reply. I wrote letters and again got no reply.
"It's still happening, working tax credit checks are not being made to ascertain if people are still working.
"When I said to the working tax credit department that I wouldn't help pay out the cheque because the person wasn't working, I was told that didn't matter."
An unscrupulous minority are said to be abusing the tax credit system
HM Revenue and Customs said it had no evidence of such abuses from migrant workers.
However, in general, the organisation stopped nearly 40,000 suspect tax credit applications between April and November 2005.
From October 2004 to November 2005 HMRC also identified and stopped 22,284 tax credit claims at payment.
A spokesman said: "If someone does have evidence of any kind of fraud against the tax credits system they should inform HMRC immediately and we will investigate.
"All claims for tax credits are checked thoroughly and any allegations of fraud investigated fully. When we find fraud we act quickly to shut it down and we can and do prosecute."