It is now possible to fine benefit cheats up to £2,000, with a minimum penalty of £350 without taking them to court.
According to the government, this measure, which is part of the Welfare Reform Act, is expected to save the taxpayer an estimated £42 million over the next three years.
Low level fraudsters will face these additional financial penalties alongside paying back any money they have stolen.
Cautions will no longer be an option, meaning no fraudster will escape without punishment.
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."
Last year around 7,300 administrative penalties were issued to benefit fraudsters. The tougher administrative penalties are the first of a range of new powers in the Welfare Reform Act designed to deter fraudsters.
In the future, it will be possible to extend loss of benefit for offences, which result in a conviction of 13 weeks for a first offence, then 26 weeks for a second offence and three years for a third offence.
There will also be an immediate three year loss of benefit for serious or organised benefit fraud or identity fraud and a new £50 civil penalty in cases where claimants negligently give incorrect information on their claim or fail to report a change in circumstances which results in an overpayment.