The first official figures to be compiled on the subject show that 370,000 migrants are claiming unemployment, housing and incapacity benefit – costing taxpayers billions of pounds a year.
Shadow immigration minister Chris Bryant blamed the government’s lax border controls for the problem.
He said: “Tory ministers are resorting to rhetoric and misinformation to hide the reality of their failures on immigration and unemployment.
“Far from strengthening immigration control the government is returning fewer illegal migrants and net migration has continued to increase. And at the same time increasing numbers of people born here and abroad are on out-of-work benefits because the government’s failure on the economy has pushed unemployment up.”
The figures might give more weight to fears that Britain has become a destination for “benefit tourists”.
However, Conservative employment minister Chris Grayling told the Daily Telegraph that it was Labour’s legacy of “organisational chaos” around the immigration system that had left the government with problems.
“It should never have been allowed to happen and Labour should be embarrassed by what it left behind,” he said, in an article co-written for the right-wing broadsheet with immigration minister Damian Green.
The nationality of benefit claimants had not previously been recorded, until ministers ordered a comparison of records held by the UK Border Agency, the Department for Work and Pensions and HM Revenue and Customs.
It found that there were 371,000 foreign-born claimants for out-of-work benefits – of these, 258,000 were from outside the European Economic Area.
In most cases, ministers found that migrants claiming benefits were eligible for the money.
However, in a small sample group, details from a quarter of claimants could not be verified, and 2 per cent of them were suspected of making fraudulent claims, the Daily Telegraph reports.
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