More than half a million poor Brits were denied a £326 summer cost-of-living payment to help with rocketing bills.
Boris Johnson offered the fund - the first half of a total £650 - to more than 8million people on benefits in July to show them “we are on their side”.
But ministers now admit 551,000 Universal Credit claimants missed out because they earned too much from work.
Labour believe some of them had two paydays fall in the same 30-day qualifying period because their wages come every four weeks.
This “staggering” technicality meant their income was temporarily too high to get a cost-of-living payment - even though usually it is much lower.
A further 6,600 Universal Credit claimants were refused the £326 payment because they got a benefit sanction - a catch first revealed by the Mirror in August.
The Department for Work and Pensions (DWP) refused critics’ pleas to ditch this “outrageous” policy - instead saying anyone who had a “nil award” can appeal, and get the £326 retrospectively.
Shadow Work and Pensions Secretary Jonathan Ashworth, who obtained the figures, said: “It’s staggering that so many people struggling to cope with the pressures of rising energy bills were denied help simply because of the quirks of DWP computer system or sanctions.
“This is a crisis for thousands of households.
“Ministers should get this vital help to those who need it.”
Some 5.6million people claim Universal Credit, but not all of them get a benefit payment every month - because UC drops by 55p for every £1 they earn through work.
Claimants’ earnings are assessed monthly and they are given a “nil award” if it their pay is too high.
This can also happen if two pay checks fall in one 30-day period, or if they are hit with the harshest benefit sanctions for “failing” to look for work.
Anyone who received a ‘nil award’ between April 26 and May 25 was denied the £326 cost of living payment.
The second cost of living payment worth £324 will be paid to benefit claimants from November 8.
Universal Credit claimants who had a ‘nil award’ in the second qualifying period, August 26 to September 25, will once again miss out.
A further 470,000 housing benefit claimants did not receive the £326 because they were not claiming one of the benefits that qualifies for targeted cost of living support.
But Universal Credit claimants who received a ‘nil award’ because their benefits were deducted to repay debts were able to get the £326.
A DWP spokesperson said: “ Cost of Living Payments have been designed to target support for households with low incomes, on means-tested benefits.
“But inevitably a small number will be ineligible on the qualification dates of a change of income, earnings or other circumstances.
“All claimants have the right to appeal their entitlement.”
The DWP highlighted a £500m hardship fund and Liz Truss ’s cap, that will keep the average household energy bill at £2,500 a year until 2024
But former Sainsbury’s chief Justin King slammed the cap, telling Sky News today: “I don't think the Government should be giving to those people who can afford to pay their bills - so it can give more money to those who are going to struggle.”
