The Department for Work and Pensions (DWP) announced it will link benefits with the PAYE tax system via RTI in order to combat fraud.
The move is part of a long term initiative, including a series of other measures, to tackle fraud and errors.
It announced the plans alongside the publication of its 2012/13 benefits error and fraud figures. Figures show that fraud and claimant error overpayments totalled £3.5bn last year, or 2.1% of welfare expenditure.
Around £1.2bn of expenditure is overpaid due to fraud, £1.6bn due to claimant error and £800,000 due to official error.