Benefits cheats in Leicester claimed nearly £1 million they were not entitled to last year.
City council fraud investigators uncovered £925,627 of housing and council tax benefits paid to people who had lied about their circumstances to get money they should not have had.
Those overpayments, made between April last year and March this year, marked a record high, an increase from £885,000 the year before.
The state of the economy is being blamed, in part, for the increase in fraudulently claimed benefits, with people being more tempted to cheat the system because of financial difficulties.
"There has to be an element of that," said city council investigations manager Stuart Limb.
"When times are hard, there will be the risk of an increase in fraud.
"People who might be wavering decide to take the chance.
"We pay out about £90 million in benefits a year so the proportion of fraud is very small, but it shouldn't be happening because it is the people who don't cheat who pay for it."
Mr Limb said the £925,627 related to 221 cases. The council is in the process of clawing the money back through the courts, where 126 people have been prosecuted.
A further 65 fraudsters have been given administrative penalties, which are like fines, and 30 have been cautioned.
Mr Limb said the cheats risked a prison sentence.
One mother-of-four falsely claimed a total of £100,000 in housing benefit, council tax relief and income support over several years. She was jailed for 18 months.
Another couple were jailed and forced to sell their house after their £75,000 fiddle was uncovered.
They faked a tenancy agreement on a house they owned so they could claim benefits.
In another case, a mother and daughter were also jailed for faking a tenancy agreement to claim £40,000 of benefits they were not entitled to. They had a holiday home in India and thousand of pounds of savings in secret accounts.
Councillor Lynn Moore, a member of the council's audit and risk committee, congratulated the authority's investigation team for uncovering the record amount of illegally claimed cash.
She said: "It must be a sign of the times, with more and more people being tempted to try benefits fraud."
Deputy city mayor councillor Rory Palmer said authority investigators were becoming increasingly accomplished. He said: "We are getting more effective at identifying fraudulent claims.
"It is an important area of work.
"People who make such claims are breaking the law and it is wrong.
"They will be found out and they will pay a heavy price.
"They are taking money from an ever-decreasing pot and, importantly, from people who need to make legitimate benefits claims.
"In the current situation, more people are struggling, but I would urge them to contact us at the earliest time to see if we can help them – not to consider making claims they should not."
Anyone with information on suspected fraud should call the council's fraud hotline on 0116 238 5262.
