Huntingdonshire District Council reclaimed more than £600,000 in overpaid housing benefit from claimants, which charities say could push them dangerously into debt.
Turn2Us, which helps people in financial hardship, warned that recovering funds paid in error could have a “snowball effect”, putting people at risk of serious poverty and impacting their mental health.
The Department for Work and Pensions data shows the amount of money recovered by the local authority which was accidentally paid to people who are not entitled to benefits or who got paid more benefit than they should. Cases of fraud are excluded.
The latest figures show that, in the nine months to September last year, housing benefit claimants had to pay back £624,000 to Huntingdonshire District Council from overpayments.
Matthew Geer, campaigns manager at Turn2Us said: “A benefit overpayment can happen for many reasons. It’s often something as simple as a DWP error or a small unreported change in circumstances.
“However, we are seeing that overpayments can have a real snowball effect on some claimants which often results in people falling into more severe debt and being harassed by bailiffs.
“The impact this can have one someone’s well-being is often overlooked and we speak to people every week struggling with their mental health as a result.”
Housing charity Shelter says the rates at which “housing benefit overpayments are clawed back can be incredibly high”, which can push people into debt and homelessness.
Additionally, Huntingdonshire District Council wrote off £50,000 of housing benefit overpayments.
In September 2018, the council still had £2million of housing benefit overpayments outstanding.
Mr Geer added: “We encourage local authorities to take a holistic and sensitive approach to recovering accidental overpayments.
“It is vital that a benefit overpayment doesn’t become a trigger for falling into serious poverty.”
Across Great Britain, overpayments during the period totalled £588 million, a 15 per cent drop compared with two years earlier.
During that nine month period, local authorities recovered £506 million of housing benefit overpayments, while £74 million was written off.
A total of £2.1 billion remained outstanding across the country in September.