Continuing failures in the government's tax credits system have prompted calls for a Treasury minister to be sacked.

Figures being published on Wednesday revealed that £1.8bn was overpaid in 2004/05 on more than 1.9 million claims.

While down on the previous year's £2.2bn, it will be the second successive year in which vast amounts of money have been wrongly paid out despite government pledges to tackle the problem.

HM Revenue and Customs has previously written off £1bn, accepting that it will be impossible to claim back cash paid out in error.

There has also been criticism that attempts to reclaim overpaid credits by reducing the amount of money paid out to individuals and families has left claimants in poverty.

The Liberal Democrats said paymaster general Dawn Primarolo, the minister responsible for tax credits, should now be sacked.

"Last May, the paymaster general claimed that the system was working well for the vast majority of families," said pensions spokesman David Laws.

"But today's figures show that the minister is clearly in denial - in actual fact 44 per cent, over 2.8 million people, received incorrect tax credit payments.

"The minister has known of the systemic failures in the tax credit system for years and today’s figures are yet more evidence that too little has been done to rectify them.

"Recent modifications to the system are too little too late."

But chief secretary to the Treasury Stephen Timms said ministers were taking action to tackle the problems.

"The government has already taken action to improve the tax credit system in response to the lessons learnt in the first year of the system," he said.

"These changes give greater certainty to families while maintaining flexibility to respond to changing circumstances.

"As today's figures confirm overpayments have now fallen by a fifth. The 2005 pre-Budget report set out a substantial package of further measures.

"Once fully implemented, we expect them to reduce overpayments in future years by around one-third."

Timms also insisted that the tax credit system had delivered increased incentives to work, reduced the tax burden on low to middle income families, and helped to reduce child poverty.

"Tax credits are benefiting six million families and around 10 million children and reaching far more low and moderate-income families than any previous system of income-related family support," he added.

"Take-up of tax credits is at unprecedented levels with first year take up of around 80 per cent and 93 per cent among the poorest.

"They have played a vital role in reducing child poverty, with 700,000 children lifted out of relative poverty since 1997."

The Conservatives, meanwhile, blamed the chancellor for the system's problems.

"This government is in meltdown and they have Gordon Brown to blame for it," said shadow paymaster general Mark Francois.

"He has created a system of tax credits which is far too complicated. Apart from failing the needy, the system is not fit for purpose."