Government inspectors have praised a multi-million pound partnership which has helped thousands of families through the recession.

Mendip District Council's contract with Capita, which runs its council tax and benefits service, has been recognised by the Audit Commission as benefiting from "mature and constructive" relations.

Inspectors said that despite the council seeing an increase in the number of people claiming benefits the amount of time it takes to deal with the heavier workload is falling.

The latest figures show that while the workload of the council's star-rated benefits team has increased by 23 per cent, the amount of time it takes to deal with assessments has dropped by 36 per cent.

The figures also reveal that over the past two years, more than 1,000 extra households have entered the benefit system with the largest increase happening during the first six months of last year – when the credit crunch really kicked in.

Since 2008, the number of households entering the benefits system has risen by 15 per cent to nearly 9,000 all receiving a share of a £33.9million benefit pot funded by the government.

This money is shared between just over 8,000 people claiming council tax benefit and 6,500 claiming help towards their rent of which just over 4,000 are in social housing. Most of the people in these figures are claiming both rent and council tax benefits.

Commission inspectors praised the council's work saying: "The service is stronger because of the council's relationship with the contractor, which brings benefits from the shared knowledge, experience and resources.

"This resource helps to achieve one of the council's corporate priorities by providing additional jobs in the town and drawing in external expertise.

"Leadership of the service is clear and improving, and the quality of leadership from councillors has also improved, with a keen interest in the service delivery, a sound grasp of the broader issues and less concern for operational detail."

The commission also highlighted a new Mendip benefits enquiry line on 0845 300 3352 as a good move to allow assessors to process claims quicker, but said more work needed to be done to improve telephone benefit enquiries.

The figures come just days after the Audit Commission gave Mendip District Council's benefits service a star rating and praised it as being "fair with promising prospects for the future".

Inspectors said benefit claimants are now having their claims processed in a reasonable time and have various ways to keep updated on their claim. It also said that the benefits team works well with other departments such as housing to ensure claimants do not get into further difficulty such as through legal action or eviction.

However, the Audit Commission has urged the council to make more effort in understanding customers' needs and to ensure that correspondence is clearer and easier to understand. It added that the council recognises its weaknesses and is making a "good start" to resolve them. The Audit Commission will also welcome recent recruitment to the council's benefit fraud team including a new full-time manager, after it raised concerns that not enough was being done to tackle fraud.

Councillor John Parham, the council's portfolio holder for Access to Services which includes the benefits service, said: "The benefits service is hugely important to the lives of the people they affect, and provide important lifelines for many of them.

"Nationally, the benefits system is attracting a lot of media attention because of the government's commitment to crackdown on benefit fraud, and this council is committed to doing the same with recent investment in ensuring we have the resources in place to tackle this issue effectively.

"Full credit must go to the hard-working teams whose work has secured this excellent inspection result in what is challenging times in terms of increased pressure from more benefit claimants because of the recession and because of the financial pressures."

The Audit Commission's benefits report comes two months after the same government watchdog gave the council's housing service the same "fair and promising" result.

To view the full Audit Commission report on Mendip's benefits service, visit www.mendip.gov.uk.