Almost 90,000 beneficiaries have been paid incorrectly, totalling millions of dollars, due to an automatic payment error.

The Ministry of Social Development says payment errors began in 1993 and have led to thousands of people receiving incorrect accommodation supplement payments for 21 years.

Social Development Minister Anne Tolley was informed of a beneficiary payment error that dated back to 1993 in March this year. Photo: Don Scott/Fairfax NZ.

Investigations into the mistake found just over 41,000 people were underpaid a total of $23 million, and almost 46,000 people have overpayments of about $32m.

Ministry of Social Development Deputy Chief Executive Service Delivery Ruth Bound says the vast majority of underpayments were less than $1000.

The mistake was discovered in September 2014 and was fixed a few months later but Social Development Minister Anne Tolley wasn't told until March this year.

"The error was made historically by some staff in allocating the wrong coding in the system without the appropriate system controls," says Ruth.

About 800 of the 286,000 clients currently receiving Accommodation Supplement were affected by the error.

"Work is underway right now to work through options to address the error and do the right thing by people who have been underpaid," says Ruth.

"I can confirm that people granted the Accommodation Supplement since December 2014 are receiving the correct rate of payment."

Anne says she was only informed when she asked the Ministry to review their practices last year.

"As part of this work, I was informed of another issue concerning the overpayment and underpayment of some people's accommodation supplement going back over 20 years. "I was informed of this on 9th March this year, and that the issue had been rectified in December 2014."

She's waiting on further advice on the total number of people affected, the total amounts involved and the best way to deal with any reimbursements.

"We will not be seeking any repayments."

Ruth is working on finding out what the Minister was told when the error was found in late 2014.

Last year, it was revealed Work and Income beneficiaries were paid a day late, with the missed payments amounting to more than $1 million.

The Ministry of Social Development would report back to ministers in June on proposals to address the automatic payment error.

It said it would also supply ministers with advice on reimbursing clients who had been underpaid, which would then go to Cabinet.

Labour's social development spokesperson Carmel Sepuloni says the mistakes are "huge" and affect many people.

"The Government really should be looking to do an overview of their system, checking whether or not there are other issues like the two that we've seen in the last year."

She was also concerned that the Minister was not told about the issue when it was discovered.

- Rosanna Price/Stuff.co.nz