Former Iraqi asylum seekers have been raking in millions of pounds by illegally sub-letting luxury London flats paid for by taxpayers, The Mail on Sunday can reveal today.

The housing benefit claimants have been funded by the state to stay in lavish apartments in some of the capital’s wealthiest addresses.

But rather than living there, the claimants have been renting them out to super-rich tourists for thousands of pounds a week.

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Palatial: The Art Deco Park West block, where flats have been sub-let to tourists for up to £3,000 a week

In one case, a family of six – who cannot be named for legal reasons – were being given £500 a week housing benefit to live in a £1 million flat near Hyde Park, which they then let out for up to £3,000 a week.

Last week investigators swooped on 21 benefits cheats – the majority of whom were identified as Iraqi Kurds – at four expensive apartment blocks.

They included Forset Court, a grand, nine-storey 1930s mansion building, and the Art Deco development Park West, both less than half a mile from Marble Arch.

Properties in both blocks come with 24-hour security, manicured lawns and concierges.

Luxury: Former Iraqi asylum seekers have been raking in millions of pounds by illegally sub-letting luxury London flats paid for by taxpayers

It is estimated the fraudsters have made more than £100,000 each by sub-letting the flats over a three-year period, while costing the taxpayer a quarter of a million pounds in housing benefit. Hany Hanna, an estate agent in Marylebone, said he had been aware of the scams for 20 years, but recently they had reached ‘epidemic’ levels.

He said: ‘They come into my office asking which blocks are best to rent. Some of them will come to the UK with a piece of paper with instructions on how to do things.

Westminster Council’s anti-fraud tsar, Councillor Lindsey Hall

‘First you have to be pregnant, then go to the housing department – they give you a flat.

‘After you get the flat, you move into another place, give the [first set of] keys to an agent, he will find you a tenant and you’ll be making double whammy – money from the Government and making money from the flat the Government gave you.’

Westminster Council’s anti-fraud tsar, Councillor Lindsey Hall, said many of the families were former asylum seekers who had been granted refugee status. They receive up to £500 a week in housing benefit which they use to rent private flats in luxury blocks.

They secure these tenancies through unscrupulous middlemen acting as estate agents, before moving into a cheaper flat.

They illegally sub-let the more expensive taxpayer-funded apartment to wealthy Arab families holidaying in London from Gulf states such as Saudi Arabia.

The Iraqi-born claimants and the crooked agents split the profits. The frauds are committed without the knowledge of the property owners, who receive the rent they are charging without realising their home is being let for much more.

The 21 fraudulent benefits claimants Westminster recently apprehended have all had their housing benefit payments cancelled and face civil court proceedings to reclaim the money.

But Ms Hall said it would be difficult to bring criminal prosecutions in most cases because of the high burden of proof councils need, which can be very costly.

She added: ‘We are asking for a more rigorous system where the onus isn’t always on local authorities to spend tens of thousands of pounds and conduct months of work to prove that someone is claiming benefits fraudulently.

‘Tougher tenancy agreements would be a starting point, and a fully traceable, fully transparent money trail ahead of that agreement being put in place.