More data about claimants and customers is to be shared between the public sector and private firms in a bid to root out fraud, the government will announce on Monday.
Ministers are to outline steps towards a more co-ordinated system to allow all claims for state funds or applications for mortgages and bank loans to be pre-checked by 2015.
It follows successful pilot schemes that have seen databases such as Scotland Yard's record of known false addresses used to root out hundreds of attempts to rip off the taxpayer.
Successful scams are estimated to cost the public sector more than £21bn each year - the equivalent of £350 for every person in Britain.
But previous attempts to join forces with the private sector have too often foundered because of "seemingly contradictory legal arrangements", officials said.
Minister for the Cabinet Office Francis Maude said a more effective data-sharing system "will make a dramatic difference to the speed and accuracy of detecting fraud".
"Sharing data and creating this checking service will mean the government can adopt a 'check first, then pay' approach," he said ahead of the publication of the proposals.
Exchequer Secretary to the Treasury David Gauke said HM Revenue and Customs was £720 million ahead of target for the year on recouping cash by "harnessing their rich information sources and using increasingly innovative ways to prevent, detect and disrupt tax fraud".
The Cabinet Office said a recent exercise to compare the police's false ID information with public sector records had identified 429 matches to housing benefit claimants.
It also uncovered matches to claims for bus passes, social housing, taxi driver licences and parking permits - as well as hundreds of visa and asylum applicants.
Officials also pointed to the use of details supplied by credit reference agencies that was expected to lead to savings of £60 million by March this year.