Councils conned out of £135m

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Scams involving the 25% single person council tax discount cost authorities £90 million alone after a "sharp increase" in claims, the soon-to-be abolished Audit Commission said.

There were also more than 4,000 fraudulent uses of disabled "Blue Badge" parking permits, according to the survey of English councils.

The commission - one of scores of public bodies being scrapped by the Government as part of cost-cutting measures - defended its work and warned that significant council staff cuts could weaken local authority controls.

Next year's "valuable" fraud survey would be the last, it added.

Other scams identified saw people claiming student council tax discounts using fake colleges and addresses, some of which turned out to be high street shops and restaurants.

Some 50,000 properties worth £2 billion had also been illegally sub-let or occupied, while Birmingham City Council uncovered £5.8 million of benefit overpayments.

The report - called Protecting the Public Purse - revealed that false benefit claims were the most common fraud against local authorities.

There were 63,000 housing and council tax benefit cases, amounting to a loss of £99 million.

But tenancy fraud - where people live in council houses to which they are not entitled or illegally sub-let them - could end up doing the most damage, the report warned.

The survey concluded: "With the recently announced abolition of the Audit Commission, our detected fraud survey for local government and the publication of the results will cease.

"The survey provides valuable information about the performance of local government in tackling fraud.

"It also helps to identify emerging fraud risks and provides an early warning system for counter-fraud staff."

The North West was the region with the highest proportion of fraud, with 19.6% of the total. London was next in line, with 18.8%.

The South West and North East contributed the lowest, with 6.5% each.

Communities and Local Government Secretary Eric Pickles announced in August that the commission was being disbanded, saying it had "lost its way".