A report by the Commons Public Accounts Committee (PAC), Westminster's chief financial watchdog, criticises lax government controls which allowed farmer Joseph Bowden to defraud the European Union (EU) of £157,000. Bowden did not grow crops he claimed had been destroyed by fires.
The PAC said Defra and the EU Intervention Board had taken steps to prevent similar frauds occurring.
"They plan more sophisticated checks based on new IT systems expected to be in place by 2004."
The UK government and EU are to create a single Rural Payments Agency, bringing together existing databases and IT systems into a single integrated network with systems to identify individual parcels of land and check all claims relating to them to prevent fraud and enable the easy cross-checking of data.
PAC chairman Edward Leigh said, "This is a tale of appallingly lax control systems. The public bodies were slow to identify fraud, slow to determine its extent and slow to take recovery action."