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A council failed to deter or prevent fraudulent claims in a boiler grant scheme it was managing for the UK government, an investigation has found.

Auditors found one-fifth of claimants in a sample of 100 were not poor enough to qualify under the .

A group of plumbers sparked the inquiry by claiming agents were encouraging fraudulent claims.

Head of housing Nina Davies said Powys council had been overwhelmed by demand, but lessons would be learned.

ECO2 was the second phase of a UK government programme to help reduce carbon emissions and tackle fuel poverty by paying for the installation of new gas boilers.

For administering the scheme, the council was paid £150 a time for checking the eligibility of each claim processed, according to the Local Democracy Reporting Service.

Following complaints from a group of local firms calling themselves the Powys Plumbing Group, independent auditor SWAP was called in by the council.

SWAP assistant director Ian Halstead told an audit committee meeting while the authority charged the fee, there was no checking of financial or fuel poverty criteria, and "minimal" record-keeping.

Out of a sample of 100 applicants checked by his team, he said 21 did not meet the criteria for grant aid.

"Vetting procedures did not show due diligence and did not deter or prevent fraudulent claims," Mr Halstead said.

Powys accounted for more than 2,000 ECO2 installations out of a UK total of 15,500.

Senior housing officer Julian Preece said the department had just one officer handling calls from people interested in the scheme.

"With hindsight it was too much for one individual," he said. "The phone was hot and ringing off the hook from morning to night."

Ms Davies said: "I can assure you we are looking at this very seriously."

She added that "things will be put in place differently" for ECO3, the next phase of the scheme.

A spokesman for energy regulator Ofgem said the organisation could not comment "on any investigation we may be undertaking" but the organisation took "any allegations of fraud seriously".