THOUSANDS of hard-pressed Swindon families have been overpaid hundreds of pounds in tax credits following a second year of administrative blunders.

New Treasury figures reveal that 6,400 families in the town were overpaid a total of £5.5m in 2004/05.

The overpayments equivalent to £859 for each family have been blamed for plunging the poorest households into financial crisis.

Some families have been forced to pay the money back through having reduced payments in the future.

In 2003/04 the beleaguered system overpaid 6,500 families an average of £984 each.

The Liberal Democrats have urged Tony Blair to sack the minister responsible for managing the flagship system, Paymaster General Dawn Primarolo.

The latest figures show that of 22,000 tax credit awards issued in Swindon last year, 29 per cent were overpaid.

Another 2,900 awards or 13 per cent were underpaid. Many overpayments occurred because a claimant's income changed but some were due to official errors in dishing out the cash or by fraud. The system has also been bedevilled by serious IT problems and targeted by organised criminal gangs using stolen identities to defraud the taxpayer.