THE Government last night urged pensioners and jobseekers in the North-East not to panic as it launched its scheme to pay benefits electronically.

From yesterday, some recipients of child benefit, state pensions and jobseekers' allowance will only be able to receive their money through an electronic transfer into a bank account, and within two years the Government plans to pay all benefits electronically.

The move has sparked controversy among pensioners and single parents' groups in the North-East, many of whom want to carry on using their benefit books.

But the Government hopes the system will cut down on the £80m of benefit fraud across the UK each year, and the £1.1m of order book fraud in the North-East.

Jane Cater, regional development worker for Gingerbread North-East, a charitable group that supports lone parents, said: "This scheme relies on people either having, or wanting to have, bank accounts, which is a sweeping assumption.

"It's worrying that this might come in and people haven't had enough information about it, and they might miss out on child benefit payments. That payment can make the difference between the family eating or not."

Help the Aged said older people felt bullied and confused, and expressed concern that under the new system people may not be able to get hold of their benefits if they were unexpectedly taken ill, or the weather was too bad for them to collect it in person.

A spokesman added that many older people were comfortable with the pensions book system.

The National Consumer Council said benefit receivers had not been given enough information about their options.

But Jackie Woods, North-East spokeswoman for the Department of Work and Pensions, said: "We are writing to everyone in stages and no one needs to do anything until we have written to them.