Billions of pounds worth of pension credits were left unclaimed in 2003-04, new figures from the Office for National Statistics reveal.

Between one and two million pensioners, half of which were over 75, missed out on up to £7 billion worth of payments. Almost half of pensioners lost out on council tax benefit.

Pension credits were first introduced in October 2003 but after six months, only between 58 and 66 per cent of those eligible to claim the credits had actually taken them up.

Overall, the figures show a ten per cent drop in the take-up of allowances since 1997-98.

Gordon Lishman, Age Concern England director-general, said: "It's shocking that up to £4.1 billion in money benefits is failing to reach the pockets of pensioners while one in five live in poverty.

"Despite the spiralling levels of council tax, around two million older people are missing out on council tax benefit, as £1.1 billion lies unclaimed," he added.

Stephen Timms, minister for pension reform, claimed that the Department for Work and Pensions is currently carrying out home visits and launching a new advertising campaign to promote benefits to pensioners.