ADMINISTRATIVE blunders have led to 16,000 Oxfordshire families being overpaid £13.1m in tax credits.

Hard-pressed families across the county were overpaid by an average of £825 each in 2004/. Many may have to repay the money.

The figures, compiled by HM Revenue and Customs, also revealed that 7,400 claimants in Oxfordshire were short-changed by £4.8m.

Oxfordshire MP Andrew Smith, a former Government work and pensions secretary, branded the errors "unacceptable".

The tax credit system, which tops up the income of poorer families, was designed to help people into work and tackle poverty.

But campaigners have criticised the operation of tax credits suggesting families have been forced into poverty as they struggle to find the money to return overpayments.

The Government has said overpayments were written off where there was a mistake and where it was unreasonable for the claimant to have spotted the error.

But Mr Smith, who has written to Chancellor Gordon Brown, urging him to overhaul the unwieldy tax credit system, said: "It's unacceptable and the government has got to improve on that dramatically.

"I would say to any worried constituents, contact me and I will sort it out. But it shouldn't depend on people getting on to their MP, the system should be working in its own right.

"Tax credits help a lot of people, but where you have people on relatively low incomes finding themselves landed with large repayments, it could put their finances into difficulty. So it's important to make the system simpler and clearer."

The Inland Revenue was expected to try to reclaim the vast majority of overpayments, which would threaten thousands of families with financial hardship.

In 2003/04, the first year of the tax credit system, £2.2bn was overpaid. Of that, £100m was written off by the Government.

Nationally, more than 1.9m claims were overpaid in 2004/5 up 120,000 from the first year of tax credit payments in 2003/04.

Those owing money and still receiving tax credit will have their payments slashed while those no longer in receipt of the benefit have to come to an arrangement with the Inland Revenue.

The tax credit system has been plagued by serious IT problems and targeted by criminal gangs using stolen identities to defraud taxpayers.

Kate Green, the chief executive of the Child Poverty Action Group, said: "Tax credits have helped millions of low-income families, but they have not always worked as successfully as they should have done.

"Behind the figures are the stories of thousands of families who have struggled to survive when overpayments have been clawed back."

The Government said take-up of tax credits was at unprecedented levels.

Concerned families can contact the tax credit helpline on 0845 3003900.