More than 150,000 people receiving sickness-related Universal Credit payments are recorded as having "unknown" health conditions.
Data found by the Conservative Party revealed that 151,850 claimants currently receive sickness benefit supplements to their Universal Credit despite their conditions being classified as "unknown" in official records.
The total cost of supporting this group is estimated at £770million.
It is understood that many of the claimants do not have a formal medical diagnosis recorded on their files.
The figures have prompted renewed criticism from senior Conservatives, who argue the welfare system requires tighter controls and greater oversight.
Helen Whately, the shadow work and pensions secretary, criticised Labour's handling of welfare spending.
She said: "Over 150,000 people are getting sickness benefits worth £5,000 a year, and the Government has no idea why.
"There's no diagnosis on file and no evidence of why the benefit is being paid. This is taxpayers' money, but the Government is handing it out."
DWP data reveals 151,850 sickness benefit claimants recorded with 'unknown' health conditions
|GETTY
Mrs Whately also accused Labour of failing to control the rising welfare bill.
She said: "Labour has no grip on welfare spending. Keir Starmer is too weak to face down Labour MPs. Last year, they tried to make savings but ended up spending more. The benefits bill is out of control."
Former work and pensions secretary Sir Iain Duncan Smith also criticised the system.
Sir Iain said: "Marking conditions down as 'unknown' is a cop-out. People know there are ways around the system and they chance it."
LATEST DEVELOPMENTS:
The former Cabinet minister argued that the reduction in face-to-face assessments had contributed to problems within the system
|GETTY
He said: "Much of this has gone haywire because they're not doing face-to-face assessments and officers aren't able to check. And what happens is, these things get abused."
Sir Iain called for reforms to the assessment process and said previous progress in reducing workless households had been reversed following the pandemic.
The Department for Work and Pensions rejected suggestions that benefits are being paid without appropriate checks.
A DWP spokesman said: "No one can claim without the impact of their condition being assessed."
The department said eligibility can be determined through documentary evidence where sufficient information is available to demonstrate how a condition affects an individual's daily life.
The spokesman added: "Where there is sufficient evidence a person's condition severely affects their daily life, their eligibility for benefits can be confirmed through a paper-based assessment alone.
"This is recorded on the paperwork but marked as 'unknown' in the data."
The DWP said all claimants included within the figures had undergone an assessment process and had been found eligible for support.
The department maintained that the "unknown" classification does not mean a claimant's circumstances have not been reviewed, but reflects the way some assessment outcomes are recorded within official datasets.