The Conservative group leader at Cornwall council has quit her post over the use of "lie detector" tests on people claiming benefits.

Fiona Ferguson, who was responsible for corporate resources at the unitary authority, cited concerns about the use of voice risk analysis (VRA) software. In her resignation letter to Jim Currie, Tory leader of the council, Ferguson warned that using VRA would not help the council to pursue fraud and would be "extremely damaging to our reputation".

She added: "It is clearly right that Cornwall council takes a strong line against people who deliberately mis-claim tax benefits but in this case I am more concerned about the impact on the vast majority of honest claimants."

Ferguson claimed in her resignation email – which was placed online by councillors – that Currie had threatened to sack her from her post if she revealed the details of the lie detector test being used. She also announced that she was launching a petition to require any use of the technology to be approved by a larger meeting of the council.

Private outsourcing company Capita says on its website that VRA is "capable of identifying stress and emotion in a caller's voice pattern". The contract will cost the taxpayer about £50,000 but is intended to save many times that amount in preventing false claims, according to Cornwall council which states that research carried out in other areas of the country suggests 4%of single person benefit discounts could be false claims.

A council spokesman said: "As part of this 'zero tolerance' approach to fraud, the authority has commissioned Capita to carry out a review of all council tax payers who are receiving a 25% single person discount on their council tax bills."

He said letters asking for claimants to provide information on their current circumstances have been sent to more than 30,000 households and telephone interviews will be carried out with a number of claimants to verify the details they have provided.

"These interviews will be carried out by trained assessors who will use specialist technology to assist this process," he said.

Currie said: "There is tremendous pressure on the council's budget and we need to do everything we can to prevent fraud. This will not affect people making genuine claims but we estimate that identifying and removing inappropriate claims could save the council at least £1m."

Ferguson's resignation letter noted that the techniques used by Capita were used by the Department of Work and Pensions (DWP) on a trial basis in 24 local authorities on the processing of housing benefit between August 2008 and December 2010.

A subsequent report said: "From our findings, it is not possible to demonstrate that VRA works effectively and consistently in the benefits environment. The evidence is not compelling enough to recommend the use of VRA within DWP."

Capita said it was not commenting on issues surrounding Ferguson's resignation. In response to the DWP report, the company said: "The selective use of VRA technology for the purposes of verifying high risk applications for council tax single person discount is a useful additional tool in the validation process of identifying fraudulent claims. The technology is not used in isolation."

Southwark council in London has also reportedly used the Capita technology, to check households where a 25% council tax discount was being claimed. Harrow council said it used VRA software in a pilot scheme for housing benefit and council tax benefit claims, but stopped using it a number of years ago.