Foreign criminals are trafficking children as young as three months old into Britain and using them to defraud the benefits system of millions of pounds, a Sunday Times investigation has found.

Children are taken from their families, brought to Britain and used for fraudulent benefit claims involving forged immigration documents and employment records.

In many cases the children are trafficked with the complicity of their parents. They are trained in street crime and placed with unrelated adults to enable fake benefit claims to be paid into accounts controlled by the trafficker.

In a police operation earlier this month in northeast London, four suspected child victims of trafficking from Romania were placed in foster care.

Officers found evidence of suspected benefit crime in excess of £100,000, including one backdated payment to a family for £24,000. In another case using trafficked children, one gang is believed to have forged documents for at least 500 claims worth £4.5m.

It is the first detailed evidence of systematic child trafficking being used to defraud the British benefits system. The money is believed to have paid for the foreign criminals’ mansions and luxury cars in their home towns.

Tandarei, a small town in eastern Romania, is one of the bases of the suspected traffickers. About 100 imposing new homes conservatively valued at £20m have been built over the past five years. British police believe they have been partly funded by benefit fraud.

Operation Golf, the Metropolitan police operation targeting the Romanian gang, has found evidence of a trafficking ring linked to Tandarei.

Unemployed Romanians arriving in the UK are not typically entitled to benefits, but the gangs forge documents providing false work histories and obtain National Insurance numbers. The children are used to claim additional housing benefit, tax credits and child benefit. They can also be presented to council officials or benefit investigators conducting checks.

The claims supplement revenue from other criminal activities such as cashpoint fraud, pickpocketing and shoplifting.

Anthony Steen MP, chairman of the all-party parliamentary group on trafficking of women and children, said: “This is an appalling scandal of desperately poor people being trafficked here to siphon off money from the benefits system. The current checks are totally inadequate and there needs to be an EU-wide response. HM Revenue & Customs and the Department for Work and Pensions (DWP) need to get a grip.”

HM Revenue & Customs and the DWP said they conducted thorough checks on fraud.

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