BENEFIT fraud inspectors are being sent in to Malvern Hills District Council because of its poor performance rating.

The council is one of only four in the country to undergo a full inspection of its benefit payments system.

A spokesman for the Benefit Fraud Inspectorate said Malvern Hills had been selected because it had not provided the necessary feedback even though it was rated as fair in its Comprehensive Performance Assessment.

"The council has not supplied quarterly reports for the second and third quarters of 2004 - between April and September."

Three other councils will also undergo the full inspection while 12 more will be subjected to smaller, focused inspections because they are poor at either processing new claims, countering fraud or controlling overpayments.

Chris Pond, Anti-Fraud Minister, said: "Many councils are improving in paying benefits accurately and on time to the people that need them and that's very encouraging.

"But there are still too many that urgently need to improve their performance."

However, Colin Davis, Malvern Hills District Council's strategic director of operational services, said the authority's current performance in processing claims for benefit was among the best in the country.

He added that another BFI report showed they were in the top quartile of local authorities in the country for processing benefit claims.

"This conveys a totally false impression - this council is one of the best in the area for the time it takes to process benefits claims and handle fraud activities," he said.

The Benefit Fraud Inspectorate has been called in as it emerged that £15 billion was being lost each year due to benefit fraud and administration errors.

Mr Pond added: "Paying the right amount of housing benefits to the right person at the right time is hugely important - minimising fraud and error is essential given the £15bn paid out each year.

"The prompt payment of housing benefits is crucial to the well-being of over four million vulnerable people, and delays in processing claims for benefits can deter people from moving into work."

The Benefit Fraud Inspectorate, was set up in 1997 to investigate benefit fraud independently of the organisations responsible for administering benefits.

It will report its findings directly to the Work and Pensions Secretary, Alan Johnson.