Beneficiaries are being asked to pay for a major welfare payment error made by the Ministry of Social Development, an anti-poverty group claims.

It was revealed today that the ministry has been underpaying and overpaying beneficiaries since 1993. Almost 90,000 beneficiaries have been affected by the error, which resulted in thousands of people being given incorrect accommodation supplement payments across 21 years.

It is believed more than 41,000 people have been underpaid a total of $23 million, and just under 46,000 people have been overpaid about $32 million.

Prime Minister John Key has said those who have been overpaid won't have to pay the money back.


But Auckland Action Against Poverty advocacy coordinator Alastair Russell said the group had already heard from one woman who said the ministry had asked her to do just that.

He said the ministry acknowledged it was at fault for the woman's $964 debt, but it was still making her repay it.

Mr Russell said the Government continued to ignore the growing issue of poverty and people had to deal with agencies that degraded them when they asked for help.

"Essentially this is a government in disarray around housing and welfare policy."

He said a review of the law dictating how the ministry deals with beneficiaries won't change the poor attitude agencies have to people in need.

"Sadly it reinforces the policies that harass, intimidate and punish people on a regular basis to lower the number of people on the benefit by any means necessary and to have people so sacred they will take any low-paid or insecure job, and remain in poverty."

Despite the group's claims, the ministry is standing by its announcement today that people are not expected to pay the money back.

Social Development Minister Anne Tolley was not informed of the problem until March this year -- some 18 months after it was discovered. She said today she was waiting for more information about the problem.


"I've had initial advice on this, but I'm awaiting further advice around the total number of people affected, the total amounts involved, and the best way to deal with any reimbursements.

"We will not be seeking any repayments."

Ministry of Social Development deputy chief executive Ruth Bound said the ministry identified the error in its automated payment system, which related to accommodation supplements, in September 2014.

The problem was fixed in December that year and correct payments have been made since then.

"The error dates back to 1993 and the ministry is currently reviewing the scope and scale of the impact on people who received the accommodation supplement between from this date."

Ms Bound said an initial analysis showed more people were overpaid than underpaid. The majority of underpayments were under $1000.

About 800 clients currently receiving an accommodation supplement were affected by the error.

The ministry will report back to ministers in June on proposals to address the error.