Thirty-eight members of a western Sydney family have been caught rorting $2 million of welfare payments from the government.

One person claimed benefits while depositing $750,000 over three years and another paid off a $300,000 mortgage in just over two years while claiming income support.

A third person received rent assistance for a property they already owned, said the Department of Human Services on Thursday.

A spokesman for the department says the family fraud was discovered from a tip-off that a man had failed to declare his income.

Nineteen family members have had their welfare payments cancelled after a wide-ranging investigation and another 19 have had their payments reduced.