An asylum seeker who claimed they were 'destitute' to get thousands of pounds of taxpayers' money was found to have £74,000 in cash and illegal wages.

The scandal was unearthed by the immigration watchdog in a damning report which exposed widespread fraud in the refugee system.

John Vine, the Chief Inspector of Borders and Immigration, estimated that asylum fraud cost taxpayers £1.2 million a year. But he warned that the true amount was likely to be 'substantially higher'.

John Vine, the Chief Inspector of Borders and Immigration, said half of the recommendations in his report into the asylum system related to improvements in tackling fraud

Mr Vine said the Government was failing to tackle asylum seekers ripping off the taxpayers.

The largest fraud seen by the chief inspector saw an asylum seeker handed £18,000 in support, while pocketing £74,000 from other benefits and wages from working on the side.

The unnamed claimant was caught, but avoided jail - receiving a 12 month suspended sentence for fraud - and was not even asked to repay the cash even though they had £10,500 in savings.

Theresa May has been ordered by the borders chief to get a grip on asylum fraud

Another asylum seeker and her husband illegally pocketed £11,000 in child benefit and child tax credit. The pair saved £10,000 of the benefits - but were only ordered to repay £6,000.

Another supposedly destitute asylum seeker who was found with two laptops, a TV, several mobile phones and an exercise machine.

Destitute asylum seekers can apply for 'asylum support' once they have been allowed to stay in the country.

They can get free accommodation plus £36 a week if they are single or £72 for a couple. But as part of the deal they are not allowed to claim other benefits.

The system costs £155 million a year - supporting 26,731 asylum seekers.

In his report, Mr Vine said: 'I found no evidence that the Home Office had an effective strategy to identify and tackle fraud in the asylum support system. Work had not been undertaken to determine what its exposure to fraud risk was.

'No attempt had been made to ensure fraud and compliance teams operated in a consistent manner and there were insufficient resources dedicated to this work. As a result opportunities to identify and deter those wishing to commit fraud were lost.