Terry Moran, a senior official at the Department for Work and Pensions, said he wanted to shame bogus claimants into stopping claiming but admitted his idea was unlikely to be adopted.
Mr Moran is the chief operating officer at the DWP, and is the official "senior responsible owner" of the Universal Cerdit programme, Iain Duncan Smith's key benefits reforms.
He told hundreds of civil servants at a conference in west London on Tuesday that he wanted to shame bogus claimants into stopping claiming – but admitted that his idea was unlikely to be adopted.
More than £1billion is fraudulently claimed every year, which £60million is paid out in disability allowances, while another £10million is wrongly claimed in sickness benefits.
Mr Moran told an audience at Civil Service Live, in Olympia, West London, that healthy people who claimed disability benefits illegally distressed him “greatly”. He said "if I had my way" he would stick photographs of cheats to their neighbours' lamp-posts.
He said: “One of the things that distresses me greatly is when I see these headlines in newspapers when people have pretended to be disabled in order to get money out of the system.
“If I had my way I would put their photograph on every lamp-post in the street where they live because it is a very distressing thing for genuinely disabled people to see the reputation of disabled people damaged in the way that is by those people. We have got to do something about it constructively.”
Mr Moran told The Daily Telegraph afterwards that he was speaking personally, and it was not Government policy. He was moved to speak out, he said, because of a disabled family member who was upset by the frequent reports of bogus claimants.
Mr Moran is one of the key figures charged with introducing the Universal Credit, which replaces a slew of existing benefits and credits from October next year.
It will replace benefits including Income Support, Jobseeker's Allowance, Employment and Support Allowance, Housing Benefit, Child Tax Credit and Working Tax Credit.
He confirmed that the programme was “on track” to deliver the changes on time, with trials of the new benefit already underway.
The “managed migration” of all claimants would be complete by 2017, and there would be “no big bang” where everyone would be claiming the new benefit at the same time, but instead “a natural build up, a safe introduction of Universal Credit.
He said: “A big bang would be high risk – so we have had very constructive all colleagues across Government, including politicians, and they have all bought into this is about a managed introduction of Universal Credit.”
A DWP spokesman said last night: "Benefit fraud takes money away from the most vulnerable and costs the taxpayer over a £1billion a year.
"We work hard to tackle this problem at the frontline and regularly highlight the work of our fraud investigation teams as a warning to potential benefit cheats that they will be caught."