Benefit cheats will be fined up to £2,000 without being taken to court under new powers, which the Government said will save the taxpayer around £42 million over the next three years.
Under changes brought in by the Welfare Reform Act in England, Scotland and Wales, minimum penalties will be £350, while cautions will no longer be an option.
Welfare Reform Minister Lord Freud said: "We always push for the strongest possible punishment for benefit thieves who are stealing money from the people who need it the most.
"When it makes financial sense to do so, we will prosecute through the courts but where very little or no money has been stolen we will fine people as well as recover any overpayment, hitting fraudsters where it hurts the most.
"We are getting tougher and no one will escape justice with a mere slap on the wrists."
Before Tuesday, fraudsters faced a maximum administrative penalty of £600 with a minimum penalty of £15.
Ministers said the tougher administrative penalties are the first of a range of new powers in the Welfare Reform Act designed to deter fraudsters.
Other penalties coming into effect in the future to tackle fraud include an immediate three-year loss of benefit for serious or organised benefit fraud or identity fraud.