The sharp eyes of a junior civil servant spotted a fraud being worked on Universal Credit applications, but not before an estimated £1 billon had been stolen.
Organised crime is believed to be behind the scam which involved thousands of stolen identities.
It was spotted by the civil servant who was working closely with High Street banks regarding payment of Universal Credit when he noticed dozens of claims asking for money to be paid into the same bank account.
The fraudsters had taken advantage of looser rules which had been introduced to cope with a massive surge of claims during the pandemic. Further investigation has identified more than 100,000 such claims.
Officials have admitted that they had confirmed the identities to the gangs which had stolen them and passed on their National Insurance numbers.
BBC reporter Michael Buchanan said the Department for Works & Pensions (DWP) wants to write to those whose data has been compromised, but is struggling to identify many of them.
They are concerned about writing to the last known address in case the letter falls into the wrong hands and makes the data breach worse.
The frauds have had the added effect of compromising those whose identities have been stolen because it could take months before they are paid the correct amount of benefits they are due.
There are currently 5.7 million people receiving Universal Credit – almost double the number in March.
To cope with the surge in claims, identity checks were carried out online, rather than the normal face to face procedure, and information required to complete the claim like rent costs and whether or not the applicant was self-employed were taken on trust.
It is believed that more than a million Universal Credit claims have still to be checked and there is an additional concern that some people may have claimed the benefit without declaring they had received government grants designed to help the unemployed.
This is not the only benefit raid made by the criminal gangs. Last month the National Audit Office (NAO) admitted as much as £3 billion may have been scammed from the furlough scheme.
The DWP has requested £200 million over three years from the Treasury to enable it to prevent such mass frauds and save the taxpayer an estimated £500 million a year, but the Treasury turned down the request.