More than £20 million was paid in incorrect Social Security Agency (SSA) benefits in Northern Ireland last year.
Rates of fraud and error reduced for the third year in a row, the National Audit Office said.
A report from the public spending watchdog said improvements had been made.
Amyas Morse, auditor general, added: “The Agency has again reiterated to me its commitment to tackling fraud and error in the benefits system and I look forward to seeing further sustained improvements in future years.”
The SSA is responsible for administering benefits paid out of the National Insurance Fund, to which workers contribute. The money is handled through Whitehall and does not affect the Northern Ireland block grant.
The Agency estimated the value of incorrect benefit payments due to fraud and error was £21.1 million, just under 1% of all benefits, during the 2012/13 financial year.
The reduction of levels of fraud and error is a key priority of the Agency, with staff trained and specific targeting of claims based on an assessment of the risk.
The NAO was unable to determine how much of the reduction in fraud and error was due to a change in the proportion of mispayments over time and how much was down to normal statistical variations in the estimates produced by the Agency.
The auditor said: “The Agency’s best estimate of error and fraud does, however, suggest a further decline in 2012/13.”
Stormont’s Department of Social Development (DSD) has overall responsibility for benefits payment in Northern Ireland, with three public bodies administering the claims - the SSA (88% of expenditure), the Housing Executive (11%) and Land and Property Services (approx 1%).
Fraudulent benefit claimants in Northern Ireland pocketed almost £27 million they were not entitled to last year, the Northern Ireland Audit Office said last month.
The annual figure, which has soared by more than £11 million in five years, represents an “historic high”, auditor general Kieran Donnelly has warned.
Mr Donnelly, in a report on the accounting performance of all Stormont’s departments, said the main factor behind the rise from £22.7 million in 2011 was due to a multimillion-pound increase in fraud in housing benefit claims.