TAX credits are the most popular family benefit ever, according to Labour - but York families say the system is still not working.

City MP Hugh Bayley has welcomed the announcement by Dawn Primarolo, Labour's Paymaster General, that almost 90 per cent of eligible families have claimed the tax credits in their first year.

According to Mr Bayley, only 57 per cent of eligible families took up family credit in its first year.

He said: "The tax credits are providing a lot of extra money to York families. The Tories want to scrap tax credits, but Labour believes in helping hard-working families."

But families in York, who have been left in financial trouble due to problems with the system, say they have been let down.

Mother-of-two Julie Acaster was almost driven to give up her job as a York bus driver when a catalogue of confusing blunders left her out of pocket. Her five-year-old son Aaron was deleted from the Inland Revenue's computer system twice.

She said: "I have supported Labour in everything they have done, but I am really angry about this. It's a totally stupid system and it isn't working."

Since January, Julie, 27, of Saxon Vale, Shipton-by-Beningbrough, has made more than 40 phone calls to try to sort out her benefit and in total, she has received 17 award notices all telling her she was entitled to different amounts of money.

Health care assistant Julie Paine, 28, of Hamilton Drive East, Holgate, York, is still waiting for her tax credits almost four months after she applied for the benefit. She has been told she cannot receive any money for her two-year-old son, Sean, because her Irish partner does not have a National Insurance number.

"The worst thing is the helpline, it's a waste of space. The people you get through to just fob you off," she said.

"The system is just a farce."

Updated: 09:59 Friday, May 28, 2004