However, the Australian Institute of Criminology says the actual results are likely to be worse, as the losses can be hard to measure and ''organisations are reluctant to officially report'' the offences.

Home Affairs Minister Jason Clare issued the annual Fraud against the Commonwealth report yesterday, which details more than 700,000 reported incidents worth almost $498 million.

The estimated amount of money lost was 17 per cent less than in the previous year.

Misuse of social security payments accounted for about 613,000 alleged incidents.

Agencies also reported 66,302 cases of fraudulent visa and citizenship claims.

The vast majority of fraud was committed by those outside the bureaucracy. However, the report notes a 10 per cent rise in the number of allegations against insiders, who accounted for estimated losses of $2 million.

Fraudulent access to leave and staff allowances, as well as misuse of government equipment, were the types of internal fraud most likely to affect government workplaces.

Agencies also reported 243 allegations of corruption against public servants, such as bribery or abuse of a conflict of interest.

The report cites a 2010 survey by consultancy firm KPMG, which found collusion between criminals and corrupt officials was more common than in previous years.

The KPMG study also profiled the ''typical'' fraudster: a 38-year-old man whose job paid about $113,000 a year and who had no known history of dishonesty.

This typical culprit acted alone, usually motivated by greed, and stole on average $229,000 from his workplace before being caught 12 months after beginning the fraud.

The institute's director, Adam Tomison, said fraud against the government was ''often not reported officially and sometimes repeat victimisation occurs - occasionally by the same offender against the same agency''.

The report also warns that Australia's carbon pricing scheme, which comes into effect this year, will present new risks for government.

It details two large fraud attacks on Europe's emissions trading system over the past two years, which in total stole more than 30 million euros in carbon allowances.

The Australian Crime Commission has also raised concerns over the potential for carbon pricing schemes ''to be manipulated by organised crime groups for financial gain''.

Mr Clare said yesterday the half a billion dollars lost through fraud and theft ''could be spent on schools, hospitals and roads''.

''But there is an even greater potential cost involved: the loss of public trust and confidence in the public sector. Good government requires a good public service. And the key to a good public service is trust.''