A government inspection into how the council handled the issue in the last year revealed they made limited use of prosecutions.

Inspectors said they found there was little evidence of commitment to an anti-fraud culture.

But Councillor Maureen Child said the report failed to recognise crucial work done to improve the benefits service.

A previous inspection in 2000 identified extensive weaknesses in the council's benefits administration and counter-fraud operations.

Benefit fraud inspectors found that most of these weaknesses had not been addressed.

The report also highlighted the council did not widely publicise the national benefit fraud hotline or educate its staff on the types of fraud.

Changes made

In 2005/2006, Edinburgh Council administered �156m in housing benefits, about 14% of its gross revenue expenditure.

James Plaskitt, minister for housing and anti-fraud, announced the publication of the report in a written ministerial statement.

However Councillor Child, the council's finance spokeswoman, said she was concerned that the inspection provided only a snapshot of the council's benefits service at a time when it was going through significant change.

She added: "The changes were carried out over a number of years to take the council to being among the top performing local authorities in every aspect of the benefits service."