Benefit claimants are being warned to disclose changes in circumstances as part of a campaign aimed at cutting the £1.6bn-a-year cost of overpayments.

Claimants in six pilot areas will be warned they could face a fine of up to £2,000 for not disclosing they have found a job or moved in with a partner.

The six-week campaign will use adverts, posters, social media and letters.

Welfare reform minister Lord Freud said the aim was to stop fraud and overpayment "before they even happen".

He said: "It is only a small minority who commit fraud.

"We are keen to make sure that claimants know that even small overpayments can really add up over time, so they must get in contact with us and let us know about changes in circumstances straightaway."

'Softer approach'

Analysis The vast majority of benefit claimants are honest. Cheating the system may not be as common as some tabloid headlines suggest. But welfare fraud has been a stubborn problem. It costs the taxpayer more than £1bn, and detection rates have barely improved in five years. These six pilots will use different ways of appealing to the public - to find out what works best. In a few months, the results will be used to inform a national anti-fraud campaign. The question is whether switching the emphasis (between TV adverts, posters, letters & Facebook) makes any difference. Will a slightly different approach really help unmask the small but hard-to-crack group of deliberate cheats?

At £1.6bn, overpayments of benefits because of an error by claimants was higher last year than the £1.2bn cost of deliberate benefit fraud.

As part of the advertising campaign, posters will be put up asking: "Claiming benefits? Got a new job? Make sure you tell us. We're checking benefit claims."

The letters to claimants will also highlight the importance of notifying the Department for Work and Pensions (DWP) of a change in circumstances - and highlight the risk of a fine or criminal prosecution.

The pilot locations in England are Southwark and Hounslow in London, Blackburn, Blackpool and Epping Forest. The pilot is also going to run in Cardiff.

Sources at the DWP describe the new campaign - which also includes posters encouraging people to report suspected benefit fraud - as a "softer" approach.

The results of the pilot scheme, and the different methods used to promote the need to notify changes in circumstances, will help decide on the form of a national anti-fraud campaign.

Labour said the government must "get a grip of rising levels of fraud and error on their watch".

"Families facing a cost-of-living crisis will be astonished that levels of benefit fraud and error are going up under Iain Duncan Smith, with £700m overpaid a year due to official error," said shadow work and pensions spokesman Chris Bryant.