Abolition of the commission had left the NFI without a clear home, leading to fears that its expertise in detecting and combating fraud against public bodies could be lost.
The commission has estimated that the NFI has saved £1bn worth of fraud, error and overpayment since its inception in 1996.
It works by matching data from 1,300 public sector and 77 private sector organisations to flag up inconsistencies that indicate that a fraud, error or overpayment may have occurred.
Commission chair Jeremy Newman said: ‘The commission is proud of the contribution that the NFI, and the close-knit team running it, make towards saving money otherwise lost to fraud, error or overpayment – amounting to over £1bn since it was established in 1996.
‘We are greatly reassured the team will continue working to help organisations identify lost revenue that, in this time of savings and efficiencies, can make a significant difference to the delivery of public services or in the support of companies in the private sector.’
Since 1996, the NFI has dealt with 15,000 cases of pension overpayments worth £450m, almost 100,000 cases of council tax single person discounts incorrectly awarded, worth £160m, and more than £250m of Housing Benefit overpayments.
It has also investigated employees falsely claiming the right to work in the UK, invalid applications for inclusion on housing waiting lists and bogus claims for ‘blue badge’ parking permits and concessionary travel passes.
The Audit Commission is to close in 2015 following plans for abolition announced in 2010 by Communities Secretary Eric Pickles.
Cabinet Office minister Francis Maude said: ‘Bringing the National Fraud Initiative into the Cabinet Office’s Efficiency and Reform Group will complement the work of our fraud, error and debt team which has already helped save £3.6bn in 2011/12.’
