Greece's fabled culture of honouring the dead has reached new heights with the discovery that the debt-choked country paid hundreds of deceased pensioners retirement payments for decades.

Under unprecedented pressure to cut spending and replenish empty state coffers, the socialist government announced it would be putting a stop to the seemingly impossible: dead centenarians receiving handouts.

"We are obliged to announce that some people in this country have been drawing pensions, though they may have died years ago," said Deputy Labour Minister George Koutroumanis.

Hundreds of millions of euros are thought to have been unwittingly wasted in payments that were dutifully deposited into bank accounts every month. Of the 500 recipients, aged over 110, more than 300 had died in the past seven years.

"One pension, for example, was paid to someone who had died in 1999," said Koutroumanis.

The crackdown, part of a historic drive to end state extravagance, will probably save the public sector up to ¤100m (£82m) a year. Although most of the handouts had lain idle in banks, some had continued to be claimed by fraudulent relatives.

After narrowly averting bankrupcty earlier this year, Greece has promised fellow eurozone nations and the IMF – the providers of up to ¤110bn in emergency loans – it will clean up its act.

Furious efforts are now underway to compile a pensioner registry.

Prime Minister George Papandreou's government, which recently completed the first ever census of civil servants, admits it has no idea of the real number of public employees.

The discovery of dead Greeks claiming pensions emerged as the ruling socialists attempted to clamp down on profligate practices, starting with chaotic account keeping.

In addition to bogus pensions, billions of euros are believed to have been lost within a leaky state system riddled with scams such as fake jobs, forged health prescriptions and fraudulent government spending in the form of supplies to hospitals and state organisations.