The public sector lost £38 billion to fraud, error and debt last year because of a "wilful ignorance" within government.
The claim came from Cabinet Office minister Francis Maude, who hit out at the casual and uncoordinated approach across government to tackling the staggering loss of public cash.
In a stark attack on Whitehall on Monday, he also vowed to "drive out old ways of working" and insisted "resistance must be knocked down".
Addressing the Institute for Government, Mr Maude said: "Fraud, error and debt. It's incredible how uncoordinated, how casual, how wilfully ignorant government has been about tackling losses in this area.
"It is only now that we have figures showing how much the public sector loses to fraud, error and debt - a staggering £38 billion last year."
Mr Maude told the Institute the coalition had already made £3.75bn in efficiency savings, which could rise to £20bn by 2015, the Press Association reported.
The Conservative minister said the government has tackled difficulties in monitoring procurement by putting in place new management information systems that collect detailed monthly records from all departments.
Taxpayers suffered a "terrible deal" in the past because less than a third of major projects were delivered on time and on budget, he added.
But procedural changes mean government can take action "before the problems become crystallised".
He added: "Our reforms to Whitehall go beyond cutting costs. We must drive out old ways of working and resistance must be knocked down.
"Management information is not headline-grabbing, it doesn't sound like a page turner. But without it - nothing else works. You couldn't run a business without it - you can't run a country without it."
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