The government has published its first ever estimates for the proportion of foreign-born people who are claiming working-age benefits in the UK.
It found that 371,000 migrants made claims last year, the vast majority of which were legitimate.
The research suggests workers born abroad may be less likely to claim benefits than UK nationals.
A sampling exercise found 2% may not have rights to benefits - but the government could not say for certain.
Before the coalition government came to power the nationality of benefit claimants was not recorded.
The government has now tried to link records on benefits, border control and tax for those who came to work, study or visit.
- As of February 2011, there were 5.5m people receiving working-age benefits. Some 371,000 of those were foreign nationals when they first came to the UK, representing 6.4% of the claimants.
- Almost 17% of all British nationals receive these benefits compared with almost 7% of all those classed as non-UK nationals when they first arrived in the UK.
- More than half of those receiving a benefit had in fact at some point become British citizens, meaning they had the same rights as people born British.
Working-age benefits include income support, job seeker's allowance, carer's allowance and disability living allowance.
Employment Minister Chris Grayling denied that the report was scaremongering and said the full picture was not clear. He said the study showed the vast majority of foreign-born nationals who claimed benefits were entitled to them.
"I think it's really important for the credibility of our benefits system... that we should understand the mix of people who come from other countries who are claiming benefits," he told BBC Radio 4's Today programme.
"We are now going to go through all the people who we've not being able to identify and we're going to repeat that exercise across the full 250,000 to have a system in which people can have confidence."
The employment minister said he wanted to reduce net migration and ensure the UK system did not attract "benefit tourists".
But Scott Blinder of Oxford University's Migration Observatory, an expert study group, said: "It's perfectly reasonable for the government to want to understand the interaction between immigration and the benefits system, but the way this has been reported has been problematic and significantly misleading for two reasons.
"Firstly, it has been publicised in manner that has created the impression that migrants are particularly likely to claim benefits, when even the report itself clearly identifies that migrants are substantially less likely to claim benefits that the UK-born population.
"Secondly, the report lumps together all 'migrants' including British citizens who were born abroad - and who clearly have the same rights to benefits as all other British citizens - and migrants who have no legal claim to be in the UK at all."
Benefit rules are complex but in general foreign-born nationals in the UK must pass various tests to show they are eligible to claim working-age benefits.
A follow-up sample by the DWP looked at 9,000 people who had come to the UK from outside of Europe. In a quarter of cases, it did not have enough information to assess whether claims were legitimate. Of those that remained, 98% were found to be valid.
The remaining 2% of claimants - 125 people - appeared to have no right to claim benefits. The DWP said it would need to investigate further because some of these could have made valid claims before later losing their entitlement to the benefit.
The government does not produce comparable figures for British-born benefit fraudsters - but estimates that 2% of all payments are down to fraud or error.
Shadow immigration minister Chris Bryant told the BBC Mr Grayling's figures were not helpful.
"More than half the people that he's talking about are British citizens - we have no idea when they came to this country," he said.
"These could be people who came in the late 1930s or 1940s as children, then got British citizenship, worked all their lives, paid National Insurance, paid tax and are now in receipt of benefits."
He added: "What the figures do show is that migrants into this country are more likely to be in work than British people."
He suggested the real intention was to "divert attention" from the fact the government was struggling to meet its pledge to cut net migration to below 100,000 by the end of this Parliament.
MigrationWatch UK, which campaigns for tougher controls on immigration, said the evidence was unclear but something was "clearly not right".
Chairman Sir Andrew Green told Today: "I'm very glad that ministers now responsible are saying in turns that the immigration system is in a serious mess."
He said the sheer scale of immigration put "huge pressure" on public services and there had been no link until now between the immigration and benefit systems.