Hundreds of thousands of poorer families are struggling to pay back the government for a second year following a 'fiasco' with the tax credit system, according to a new report.

The government paid out £15.8 billion in child and working tax credits to five million families between 2003 and 2004 and a similar amount the following year.

The report, from the Commons Public Accounts Committee, revealed HM Revenue and Customs had to claim back around £2.2 billion overpaid in both the first two years of the tax credit scheme.

Some 1.9 million families are thought to be affected by the tax credit mess made worse by overpayments mistakes being repeated two years running.

Many repayments were due to official error and fraud although some were because claimants' circumstances had changed.

"This is a deplorable situation for the hundreds of thousands of vulnerable families who have to find money for repayments," commented Edward Leigh, chairman of the public accounts committee.

He added that the cycle of overpayment was an inevitable part of way the credit scheme was devised but that the government had failed to anticipate what would happen on such a large scale - £1 billion of debt from the first two years is likely to never be recouped.