COUNCIL chiefs in the North-East say they are struggling to find hundreds of people unlawfully charged the ‘bedroom tax’ after a Government blunder.

They are all residents who have lived in the same local council or housing association property since 1996 – making them exempt from the controversial measure.

However, they have wrongly been deducted hundreds of pounds of their housing benefit, because they were deemed to have spare bedrooms.

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All must now be refunded, after the Department for Work and Pensions (DWP) admitted tenants in the same home for more than 17 years should not have been hit.

Already, more than 1,400 people in the region have been promised refunds, including no fewer than 724 known to be living in Newcastle.

But Durham County Council has hit problems, because it is forced to rely on housing records from many years before it was created in 2009.

The authority is understood to be scrambling to put together documents from the seven district councils that were abolished five years ago.

Meanwhile, Middlesbrough Council has not yet been unable to identify all its residents wrongly charged because of problems with IT software.

At Westminster, Labour has seized on the problems to warn the bedroom tax – which it has vowed to axe, if it wins back power – had descended into a “fiasco”.

Rachel Reeves, Labour’s work and pensions spokeswoman, said: “The Government have been telling local authorities to take housing benefit away from people who were, in fact, legally entitled to it all along.

“Most of these people were already in vulnerable positions and will have been pushed even further into severe hardship as a result of this Government’s errors.”

However, Labour’s bid to prevent the Government closing the loophole – to ensure no-one else escapes the clampdown – was easily defeated in the Commons this week.

The removal of the ‘spare room subsidy’ – the Government’s term – cuts housing benefit by 14 per cent for one extra bedroom and 25 per cent where there are two.

Ministers say the policy will save £500m and free up larger homes for families living in cramped social housing properties.

But a DWP spokeswoman said: “We expect very few people to be affected by this - around 5,000 - and are working with councils to ensure affected claimants are kept informed.”

Don McLure, Durham’s corporate director of resources, said: “We are looking back through our own records and working with local housing providers to identify those people who are affected and who are entitled to a refund.”

And a Middlesbrough spokesman said: “The number of tenants affected by this change is not yet known.

“If it is identified that an under-occupancy charge should not apply, benefit claims will be amended from 1 April 2013.”

The other councils that have identified the numbers hit by the blunder are; Gateshead (150), Hartlepool (96), Scarborough (66), Harrogate (30) and North Tyneside (330).