Inmates from around Australia have received a cash bonanza from taxpayers, illegally claiming $16.5 million in welfare payments while behind bars.

Data-matching identified pensions and disability payments made to almost 21,000 prison inmates since 2013 with 3500 recipients in the past year alone.

Federal Human Services Minister Alan Tudge told reporters in Melbourne on Friday that most cases were uncovered within a few weeks of the prisoners being locked up.

“In most cases we uncover those cases in a couple of weeks (of the prisoner being locked up), but in some cases it can take longer.

“We are increasing the sophistication of our data matching in order to stay in front of the criminals who go to extraordinary lengths to get around the system,” Mr Tudge said.

The government says it now matches Centrelink records with inmates around the nation to quickly cut off scheduled payments.

In some cases prisoners are rorting the system by using fake names and changing their birthdate, Mr Tudge said, which can take longer to detect.

“My message to those prisoners is, we will find you and you will have to pay the debt back and you may well end up in prison a lot longer.”

The government says it has already begun recouping costs and will “quarantine” funds from Centrelink payments or employment when the prisoner is released if necessary.

—with AAP