A new £16 million fund will help catch fraudsters who cost local authorities more than £2 billion a year, Eric Pickles has announced.
The fund will help English authorities in their efforts to combat the "scourge" of "fraud felons", the Communities and Local Government Secretary said.
Mr Pickles also urged councils to sell off up to £2.5 billion in unused assets such as empty buildings and wasteland.
The initiatives come as councils are being forced to tighten their belts, with the Local Government Association warning of a £5.8 billion funding gap between March 2014 and the end of 2015/16.
In a speech at the Chartered Institute of Public Finance and Accountancy (Cipfa) annual conference in London , Mr Pickles said: "Fraud costs hard-working taxpayers £2 billion per year.
"We are supporting councils to go further in catching fraud felons, and today I am proud to commit £16 million over two years to ridding this scourge.
"The challenge fund will be allocated to the most innovative local authorities who plan to generate the most effective savings."
The fund will give authorities two years of support to tackle losses from non-benefit related fraud, such as swindles involving council tax, blue badges or the theft of grants.
Mr Pickles called for councils to channel their energies into "getting idle assets off of their books".
"With £220 billion worth of assets, and £2.5 billion of that earmarked as surplus, it is time to start asking: 'what good is that empty, mothballed office block to the taxpayer?'"
Communities minister Baroness Stowell, who is leading the department's efforts to tackle fraud, said:
"We cannot afford to waste public sector money by not preventing fraud."
She said the £16 million was on top of £19 million to help councils catch tenancy cheats.
Cipfa's chief executive Rob Whiteman said: "This funding is hugely welcome, it will put resources into protecting taxpayers' money at the front line and every pound saved increases the amount that can be spent serving communities across the country.
"Public services across the UK are striving to meet rising demand while dealing with ongoing financial pressures.
"The Chartered Institute of Public Finance and Accountancy's new counter fraud centre will work with them to ensure that they have the tools they need to continue to protect the public purse while continuing to deliver front line services."
Sharon Taylor, chair of the Local Government Association finance panel, said: "Councils are by far the best-performing part of the public sector when it comes to collecting tax and tackling fraud and have a much better track record than central government.
"This extra funding will help the determined efforts of local authorities to ensure that money from the public purse is not taken dishonestly but needs to be put into context. Councils are tackling £20 billion-worth of cuts over this parliament.
"Fraud is an ongoing issue and Government could better help councils to tackle it through longer-term funding rather than one-off pots of money.
"Local authorities are leading the public sector in saving money through smarter use of their assets.
"Where assets are earmarked for sale, councils have a responsibility to residents to get the best value for money, rather than selling to the first bidder.
"If the public sector is to find really big savings, then Government agencies and the NHS must stop working in isolation and start sharing office space with each other and local authorities."